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Understanding The Commercial Insurance Market

The Australian insurance market is a complex tangled web of major insurers, underwriting agencies, facilities, wholesale arrangements and underwriting syndicates. Each of them have industries and products they compete well in and areas they don’t.
Although there seems to be an endless number of options out there in some respects, many are entangled in one another through ownership, partnership and equity stakes in each other’s portfolios making the market a lot smaller than one might think. This makes it incredibly hard to navigate especially as insurer appetites constantly shift and change.
It’d be a trap to think that an insurer can provide the cover you need at a competitive price and with such enormous differences in the perceived risk from one industry to another, it is unrealistic for a single insurer to be able to provide everything to everyone. Given this, it is important that as general insurance brokers we know the markets well from both an appetite and pricing prospective to be able to efficiently transfer client risk to the appropriate insurer.
For insurance brokers placing commercial risk the pricing and appetites of individual insurers is something we keep a close eye on. The market can almost be thought of as a living thing, liquid in nature and constantly evolving proportionally to insurers losses and risk outlooks. This dictates where risk is placed and on what terms throughout the year and often whether a risk is moved to other insurers upon renewal.
With the Insurance Market in a rather delicate state with the impacts of Covid-19, the market uncertainty and volatility is something commercial Insurance Brokers have grown used to in 2020.
As a snapshot in September 2020 Australian Prudential Regulation Authority (APRA) statistics showed that the general insurance industry generates gross written premiums of $51.8 billion per year insuring assets in excess of $136.5 billion. The industry overall employs approximately 60,000 people and on average pays out about $171.4 million in claims each working day. When thinking of the industry at this scale it is easy to feel somewhat insignificant but it helps shed some light as to why insurers may have hesitation towards particular individual risks given the scale and funds at play.
As commercial insurance brokers MMSE have extensive experience placing risk across a broad range of industries. We’re always on the look out for new client partners so if you or someone you know could use our expertise we’d love to hear from them.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Shane Brady, Stone Lane Broking & Risk Advisory, ABN 79 640 560 201, AFSL 232987

This article originally appeared on MMSE Blog and has been published here with permission.

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