Insurers could look to drop certain lines of business if they are unprofitable in 2018, an industry leader has said.
Robert Kelly, CEO and managing director of
Steadfast, told
Insurance Business that he expects 2018 to be a “stabilising year” in the Australian insurance industry as firms have realised that prices have to rise.
“I think that some insurers will possibly give consideration to leaving some classes that they’ve not made any money out of,” Kelly said.
“I think that in general insurance in Australia, this is helped by the storms in North America, the earthquakes in South America, and the horror of Puerto Rico. The local insurers here, whenever there’s a chance to put a line in the sand, possibly will re-think some of the classes that they write where they’ve made no money out of it, and that may mean a withdrawal of some types of cover.”
With hardening rates the talk of the market in Australia over the latter part of 2017, Kelly said that the “long awaited start towards rationalising a very low market was a highlight” of 2017.
“That rationalisation, to my way of thinking, is a stabilisation point for the market, so that the consumer will get some accretive increases, rather than what you might call increases that jump out at them and are well above what’s markedly acceptable for portfolios to move,” Kelly continued.
For brokers, Kelly said that cyber remains an area that clients still fail to understand and should be seen as an opportunity for client education.
“I think there’s no doubt that the lack of understanding of cyber and its impact on the world is grossly underestimated and grossly misunderstood by the small to medium enterprise clients, which make up the vast majority certainly of our client base,” Kelly continued.
“I think that’s the area that we really have to jump on to because as we move more and more into a digital age and more and more into the ability to use cloud formations and deal with data, rather than with real people, the opportunities for the open ability of somebody to come in and hide in some of those tranches of business is becoming more and more acute and more and more defined.”
On a separate note, with mandatory breach notification waiting in the wings, Kelly said that while he believes the legislation doesn’t go far enough it is a step in the right direction.
“I think that the only disappointment for me is that it’s just the notification that one occurred, rather than a ramification about what occurred and the rectification about what occurred,” he explained.
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