Insurer expects large increases in premiums

Insurance Australia Group has made the prediction there will be double-digit rises in insurance premiums in the next year, due to increasing global reinsurance costs.

Reinsurance price increases were only now working their way through the system, but further measures were needed to protect margins according to IAG’s Mike Wilkins. He said they have had a tough few years, mainly driven by external market factors, particularly perils and higher reinsurance costs, but they have started to come through it.

Reinsurers are still trying to recover the huge losses from the various natural disasters that have hit the world, and in particular Australia and New Zealand.  IAG sees the pricing increases for the next year for home and motor in the range of 5% to 10%, some will be more, some will be less.

From an Insurance Broker’s point of view, as part of IAG’s results this week that its insurance business, CGU, nearly doubled its earnings to $258 million.

This follows how Suncorp’s results, announced the same time this week, were also boosted by its broker handled commercial insurance business Vero as well.