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Australian commercial rates maintain strong growth

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Commercial rates in Australia recorded double-digit rises last year, building on similar gains in 2017, according to Swiss Re’s latest Sigma report.

Casualty is the only line that bucked the trend, with rates remaining soft.

Overall premium growth was 2% last year, underpinned by the robust commercial lines.

Personal lines were “subdued”, hampered by economic uncertainties, growing concerns over the housing market and lower interest rates.

But declines in compulsory third party motor premiums are seen as less of an economic drag, while property will continue to post robust growth, the report says.

Global non-life premiums are forecast to increase 3% this year and next, supported by strong growth in China and other emerging Asian markets.

Overall premium including life insurance was nearly $US5.2 trillion ($7.4 trillion) last year – the first breach of the $US5 trillion ($7.1 trillion) mark.

“The outlook is promising,” Swiss Re Group Chief Economist Jerome Jean Haegeli said.

“While global economic growth is slowing, we expect insurance demand to hold up over the next two years, and China will be the main contributor to premium volume gains in both the life and non-life sectors.”

Swiss Re says China, the second-largest market behind the US, is on course to grab top spot by the mid-2030s.

Motor – the dominant non-life line, with one-third of global premium – faces probably the biggest pressure as driverless cars become mainstream.

“The transition will be long-running and difficult to predict, but we think the technological innovations will… likely lead to lower claims and hence also lower premium rates and volumes in motor insurance.”