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Market Update
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Regional - Australia
Printable Version
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The Australian insurance market has enjoyed strong competition and soft market
conditions for the last two years, but modest rate increases were experienced during
2009. Forecasts are for further modest increases in 2010 and 2011 as global capacity
keeps local insurers more competitive.
| Australia Actual and Expected Premium Rate Movements* |
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2007A |
2008F |
2008A |
2009F |
2009A |
2010F |
2011F |
| Commercial Property (Fire and ISR) |
-9 |
-3 |
-3 |
4 |
5 |
6 |
5 |
| Commercial Motor |
-2 |
6 |
9 |
8 |
10 |
6 |
5 |
| Public and Product Liability |
-10 |
-6 |
-6 |
-1 |
1 |
4 |
4 |
| Workers' Compensation (WA Only) |
-14 |
-7 |
-12 |
-6 |
-6 |
8 |
5 |
| Workers' Compensation (Tas, NT, and ACT) |
-11 |
-7 |
-8 |
-1 |
-5 |
6 |
4 |
| Professional Indemnity |
-9 |
-6 |
-7 |
0 |
4 |
8 |
6 |
| Directors and Officers |
-8 |
-6 |
-7 |
0 |
4 |
8 |
6 |
| Weighted Average |
-8 |
-3 |
-2 |
3 |
4 |
6 |
5 |
*Source: 2009 JP Morgan Deloitte General Insurance Survey
The global insurance market responded to the financial crisis with strong financial discipline and reduced reserves, leading to strong global competition, keeping local markets in check. As discussed below, a lack of real competition is a concern in the Australian market going forward.
The outlook for claims costs is poor, with Australia experiencing inflation at higher-than-expected levels. Major losses, particularly bushfires and other extreme weather-related losses, continue to impact claims trends.
Industry capacity is reducing in Australia with 16 underwriters operating under 63 different brands—making competition to appear greater than is actually is the case.
| Change in industry capacity (%) |
|
2007A |
2008A |
2009A |
2010F |
2011F |
| Commercial Property (Fire and ISR) |
4 |
6 |
1 |
0 |
1 |
| Commercial Motor |
4 |
2 |
0 |
0 |
0 |
| Public and Product Liability |
13 |
-1 |
0 |
5 |
5 |
| Workers' Compensation (WA Only) |
2 |
0 |
1 |
1 |
1 |
| Workers' Compensation (Tas, NT, and ACT) |
2 |
0 |
0 |
0 |
0 |
| Professional Indemnity |
11 |
9 |
2 |
0 |
0 |
| Directors and Officers |
10 |
7 |
3 |
2 |
2 |
Source: 2009 JP Morgan Deloitte General Insurance Survey
Local People Hire News
Lockton’s Australian equity partner, Australian Reliance, has agreed to acquire Saltwater Insurance Consultants. Saltwater is a specialist insurance law firm that provides legal and advisory services in relation to corporate insurance and self-insurance programs.
As part of the agreement, the managing director of Saltwater Insurance Consultants, Chris Stannage, has joined Australian Reliance as Managing Principal of the Sydney office. Chris has more than 14 years of experience in insurance and law as both a solicitor and in-house counsel. Chris practiced with the insurance teams at Clayton Utz, Minter Ellison, and Cocks Macnish. As in-house counsel, Chris was responsible for managing Multiplex Limited’s global insurance and self-insurance program for almost five years, and was most recently Director Legal Services for TNT Express.
Australian Reliance has also employed Con Bochrinis as a principal of the Perth office. Con was previously employed as JLT’s Western Australian general manager specializing in workers’ compensation. Con has 14 years of experience managing complex accounts for leading Australian corporations.
Both the acquisition of Saltwater Insurance Consultants and the employment of Con Bochrinis allow Australian Reliance to remain at the leading edge of the insurance industry and provide our clients with better solutions to their insurance requirements.
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Please contact your Lockton Representative for further information regarding any information contained in this
market update.
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Adam Rhodes
Australian Reliance
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