KPMG: Claims costs offset stronger premium growth

By Rob Starr, Content Manager, Big4.com

KPMG’s 2012 General Insurance Survey reports  that while Australia’s general insurers reported stronger growth in premiums, insurance profits have been impacted by net claims and some reinsurance costs.

Catastrophic losses, such as the 2011 Queensland floods and storms, were not as prevalent in the year to 30 June 2012, however those costs were substantially borne by reinsurers.  This year the general insurers have borne a larger share of the costs of smaller events, such as the Melbourne storms (Dec 2011), impacting their result.

“The 2012 result reflects the impact of further severe weather event losses, increased reinsurance costs for some insurers, and the effect of interest rate reductions. This confluence of factors has limited some of the benefit of premium increases,” said KPMG Insurance Partner, Ian Moyser.

KPMG’s 2012 General Insurance Survey reports that gross written premiums increased 8.3% to $28,602 million (2011:$26,399m) while underwriting surplus fell from $1,229 million to a deficit of $438 million. These results, which include the effect of interest rate reductions this year, have the surveyed insurers reporting an 18.5% decrease in their insurance profit to $2,510 million (2011:$3,081 million).