Despite the hardening market for commercial property insurance, underwriters are struggling to achieve rate increases at the level required to restore profitability in the short term, says Taylor Fry, an analytics and actuarial consulting firm.
In its Radar report, an annual roundup of Australia's insurance landscape, Taylor Fry notes that the gross loss ratio for FY2019 of 69% was in line with the previous FY2018 figure of 67%, despite the adverse impact of the catastrophic Sydney hailstorm and Townsville flood events. Overall, the business remains unprofitable, with the annual combined ratio exceeding 100%.
The insurance cycle turned in 2017, with premium increases currently exceeding claim inflation. This suggests profitability will improve in the absence of catastrophic event activity.
Insurers are also being more selective, with perceived poorer risks being singled out for larger premium increases.
Taylor Fry drew on APRA data, combined with the firm's knowledge and decades of experience in the industry. Across three years of results, the analyses break down each line of business to help insurers benchmark their performance, and assess strategies and goals.