The insurance market has experienced transition from what was perceived to be a hard market at the beginning of 2005, which saw the failure of insurance companies, and a spate of catastrophic natural disasters.
In June 2005, the market experienced a major shift, when a number of insurers, with increased capacity to write business, actively pursuing risks to insure. This facilitated a move to a “softer” cycle, evidenced by a reduction in rates and premiums available to insurance purchasers. This cycle continues today, with more new players entering the scene, and continued interest from Lloyds of London in the Australian market.
There has been much speculation about the impact recent natural disasters will have on the market, especially in the US with Hurricane Katrina. To put this into context, the losses resulting from September 11 saw estimates of $US 180 billion being quoted, while Hurricane Katrina has estimates ranging up to $US50 billion. While loses of this magnitude will continue to put pressure on insurer’s capital, we believe these recent losses won’t affect the local market as greatly as those of 2001.
The recent Lloyds Annual Underwriter Survey (February 2006) indicated that while pricing is again expected to be the most significant concern for buyers, other considerations, such as availability of coverage, and financial security, are expected to impact in 2006. The report goes on to state that insurers felt that the greatest cause of concern for the industry was natural disasters. 63% of those insurers polled felt this to be the case. Terrorism, on the other hand, represented a much lower risk, polling only 4%.
At GSA, we would rather prefer you see your broker as an extension of your company, who can be called on to provide advice, rather than a mere service provider. The modern (and unpredictable) world requires that insurance and broking reflects all-round understanding of your business and the exposures it faces.