Following recent press commentary on the performance of the major Australian insurers, NIBA CEO Dallas Booth has launched a defence of the insurance industry and a plea for the media to treat the sector with a greater level of fairness and accuracy.
In an article written for the Feb/March 2012 Insurance & Risk Professional magazine, Booth criticises "lazy reporting" on the back of media reports on market updates released by QBE, IAG, Suncorp and Wesfarmers.
Booth writes: "Because it's written in the financial press, it's likely that the less-aware readers will take it as a reasonable assessment of the situation. I don't.
"Insurance is not the only industry facing challenging times. But rather than having ongoing implied – and actual – criticism of almost all aspects of the business, it's about time there was recognition that the industry is actually doing the job it sets out to do, and by and large is doing that job very well."
QBE came under fire in January after indicating the expected yield for 2012 on their cash and fixed interest portfolio will be around 3.0%. Booth believes much of the criticism was unfair. "In the current economic climate, with so many doubts about the true value of so many 'assets' at the present time, the fact that insurers place their funds and their policyholders' funds in low-risk (and hence low-return) investments should be regarded as very sound management," he writes.
"It's inevitable that the forces of nature will occasionally conspire to reduce the short-term profitability of insurers. But there will also be times when nature is benign, and shareholders will do well."
The full article appears in the Feb/March issue of Insurance & Risk Professional magazine, due out in February.
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