Strong premium growth has fuelled a multibillion jump in insurance profits but increasing competition and affordability concerns appear set to put the brakes on.
The latest KPMG General Insurance survey showed insurance profits jumped 61% to $4.4 billion. An almost 10% jump in gross written premiums jumped and a sizeable drop in net claims costs more than offset a $1 billion drop in investment returns.
However, KPMG Partner Scott Guse says premium growth is slowing.
“This may be reflective of the reduced need for insurers to increase premiums to recover the reinsurance and catastrophe event costs of recent years, as well as the fact that the introduction of flood cover is now well advanced,” he says.
“Many insurers are also working to address the issue of ‘insurance affordability’, providing the option of cheaper rates through flexibility in policy excess options.”
Guse says new entrants to the insurance market have given consumers a wider range of products and options.
“The competition has also led to a number of insurers announcing strategies to continue to enhance the ‘customer experience’ provided to their existing customer base,” he says
“In some instances, customers may now be questioning whether their loyalty lies with with an alternative ‘non-traditional’ insurer. The answer is likely to rest with the provider of the better insurance customer experience.”
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