31.01.2011 – Premium Forecasts for 2011
INSURANCE EXPERTS expect a “two speed” track for general insurance premium rates in 2011, with commercial lines slowing and personal lines accelerating.
This is a finding of the 18th annual J.P. Morgan Deloitte General Insurance Industry Survey released today.
The survey shows respondents from the insurance industry expecting the “two-speed” market of premium rates in 2010 continuing into 2011, with anticipated rate increases in domestic lines and soft trends in commercial insurance.
“Insurers expect rates in commercial lines for most classes to decline. We believe that competitive pressures and excess capital from overseas and changes in distribution platforms in the broker space will continue to pressure rates in the commercial classes into 2012,” said JP Morgan senior insurance research analyst, Siddharth Parameswaran.
Rate pressure on liability, professional indemnity and D&O is of most concern, despite these classes being significant positive contributors to overall industry profitability in the past.
“Overall respondents were broadly optimistic this year about the outlook for the year ahead and the possible positive impact of continued economic growth for insurance companies,” he said.
Nevertheless, this could be another year of extreme natural events given the La Nina pattern and resultant wet weather on recently in NSW and Victoria.
Elaine Collins, Deloitte actuarial partner and joint coordinator of the survey, added that in commercial classes the industry faced a 1% decline in premiums last year versus a forecast increased of 6% for the year.
Premium rates in the commercial classes were unable to sustain the forecast increases, with the industry facing a one percent decline in premiums last year, versus a forecast increase of six percent for the year.
