Insurance Market Update
February 8, 2019
I thought that I should take this opportunity and write to you to briefly update you on what is happening in the Insurance Markets, both domestically and globally. In short, in many insurance sectors we are seeing an increasing and significant hardening and we hope that this high level memo provides you with a better understanding of some of the challenges ahead.
I have always believed there are similarities between the stock market and the insurance markets, they both have from time to time peaks and troughs. An old saying that the stock market goes up by the stairs and down by the lift in my opinion is the reverse to the insurance market, which tends to go down by the stairs and up by the lift.
For several years, market conditions have been favourable for buying insurance. Some risks have been challenging although generally there have been options and capacity to ensure we have been able to obtain cover with the best the market had to offer. For our clients it has always been important to obtain that competitive premium with a quality insurer and that the insurance cover meets our client’s needs. This remains our priority today.
Recent events and insurance company results have caused all insurers and underwriters to adopt a much more conservative approach when assessing risk, writing new business and renewing existing policies. Coupled with this, Lloyds, the largest Insurance Market where most of the worlds Insurers and Re-Insurers are involved have introduced restricted underwriting guidelines. We are now seeing the effect flow through to all Insurers here from the world’s biggest to the smallest specialist companies.
To highlight the underlying issues for Lloyds, Lloyds underwriting loss for the 2017 period was £3.4bn or Australian $6.15bn. A Lloyds review indicated poor underwriting performances across a number of sectors. Amongst the measures put in place was that unprofitable areas have to demonstrate a realistic route to sustainable profit. This has given indications that Insurers will increase rates and move away from risks that have underperformed and/or reduce their capacity for certain risks and with tougher underwriting conditions.
Whilst we are no doubt entering into a harder market, I wish to reassure you our strong Insurer relationships has continued to hold us in good standing. Having a strong Broking Team with depth and specialist knowledge in most areas, knowing our clients and experience over many years in the insurance markets is proving to be invaluable during these times. I should mention also that we are a member of the Australian Group Steadfast (ASX200) which is the largest producer of insurance premiums (annually over $6bn) in the Australian market, and this gives us additional market leverage if required and ultimately a competitive position at all times.
Should you have any queries, please don’t hesitate to call our Operations Director Darren Clark, your Account Manager or myself.
Could you please relay where you feel appropriate.
Gow-Gates Insurance Brokers
Phone: 02 8267 9999