Property Insurance Market Insights – Q1 2018

Your source of property insurance market trends and analysis for Q1 2018

The local and global insurance market finds itself at a pivotal moment with a balance between diminishing profitability and eager capital providers hungry for diversification.

The exhaustion of reserve releases, reduced premium volumes, larger insurer net retentions, low interest rate environments, and frequency of loss activity have all led to combined operating ratios (COR) consistently above 100% versus a target of 85% – 90%. According to APRA, some ground was made in FY 2017 as CORs improved from 117% to 113% – but the property segment remains unprofitable for the majority.

Overview

• An increase in the median property premium rate in Q4 2017 and early Q1 2018, for both the mid-market and large corporate segments, has been heavily driven by recent natural catastrophe events in the US. Properties in hazardous occupancies are seeing significantly larger increases and reductions in available capacity.
• 2017 was one of the costliest years for insurers and reinsurers; although their underlying capital position remains very strong.
• After a period of falling rates and diminished insurer profitability, premiums are expected to increase in the short term, however this likely to be short lived.
• The Australian Reinsurance Pool Corporation (ARPC) has updated its postcode tier classification, which could impact the rate of reinsurance pool premium paid as part of commercial property or business interruption insurance.

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