The Australian Prudential Regulation Authority (APRA) has released its General Insurance Claims Development Statistics report for December 2021, providing insights on industry trends seen across different classes of business throughout the year.
The annual report shared statistics for the reinsurance sector, revealing an estimated ultimate loss ratio of 52.9%. According to APRA, this was “broadly in line with recent underwriting years at the same stage of development.”
For long-tail classes of business, the following figures were reported for 2021:
These sectors of general insurance are those where claim payments are made more than 12 months following the incident generating the claim.
According to APRA, the ultimate loss ratio for CTP motor vehicle in 2021 remained in line with what was seen in 2018, 2019, and 2020, but was lower than the years before that. Similarly, reserve levels also remained unchanged, “with the only significant reserve release occurring in the 2020 accident year.”
For public and product liability, the loss ratio for 2021 was lower than previous years due to recent increases in gross earned premium. There was also reserve strengthening across 2016 and 2020.
For professional indemnity, the ultimate loss ratio in 2021 was slightly higher than 2020, as premium increases were offset by increases in expected future claims. Additionally, APRA saw reserve strengthening across 2016 and 2020.
Finally, employers’ liability saw a loss ratio that was lower than recent years, driven by premium increases. The sector also experienced reserve strengthening across 2019 and 2020 as reserve levels remained unchanged from previous years.
Short-tail business classes, meanwhile, recorded the following figures for 2021:
Unlike long-tail classes, these sectors involve claims payments that are made less than 12 months after the claim generating incident. Considering this shorter period, the ultimate claims cost estimate for most of these classes revealed little development over time.
According to APRA, the ultimate loss ratio for houseowners/householders was higher than the 10-year average of 56.7%.
For domestic motor vehicle, the loss ratio was lower than the 66.9% 10-year average, which was driven by a reduction in claims frequency due to COVID-19 lockdowns.
Similarly, Fire & ISR claims recorded an ultimate loss ratio that was lower than the 10-year average of 69.6%. However, pandemic-related business interruptions did lead to a spike in the ratio for the year 2020.
Finally, commercial motor vehicle claims in 2021 led to an ultimate loss ration that was lower than the 66.8% 10-year average, continuing a downward trend caused by premium growth and pandemic-related claims frequency reduction.
