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Why has the insurance market changed?

If you’re like me, you know the industry you work in but not a great deal about some other industries. When I catch up with mates at a BBQ, many of them are electricians and sometimes they use words that make me want to grab another beer. The same goes for friends in some other industries. Probably explains why I like beer so much...


So why am I talking about this?

Insurance is going through some historic changes at the moment. So, I thought a little summary of what we’re going through may help you make decisions to cover yourself correctly AND save some coin.

Firstly, do you know what a hard market and soft market are in General Insurance? Do you know which one we are in right now?

Generally, a hard market means your premiums could be higher and a soft market is the opposite. Right now, the insurance market is probably in the hardest market for a long, long time.

Why does this happen?

This cycle below is one of the better explanations I’ve seen. Have a look at the bottom left corner with “more large events”. Over the last 3 years alone, insurers have paid over $7 Billion in natural disasters. Think back to the extensive damage caused by bushfires, floods & cyclones across Australia in recent years and how this has impacted insurers. This is on top of the “regular“ claims paid, such as the claims for individual people and businesses.

What does this mean for me?

You may start seeing the premiums for your home, car and business insurance increase, if you haven’t already. You might also be hearing that certain types of risk are much harder to find insurance for.

The first step is to speak with your trusted advisor for a review WELL BEFORE your policy comes up for renewal. This is an important meeting, especially in a hard market. It not only gets you and the broker on the same page, it gives your broker the vital info they need to take your “insurance portfolio” to the market.

Here are a few examples of what you can talk about in your business insurance review:

  • Has your business changed or are you planning any changes to your business?
  • Is your estimated income decreasing, staying the same or increasing?
  • What risk or safety plans do you have?
  • What am I not covered for?

These are only a few examples of what your trusted advisor needs to know. In a hard market, we often have to ask even more questions, as getting insurance becomes harder. Once we have this information, we act on your behalf and take your “insurance portfolio” to the market.

What is my “insurance portfolio”?

It is everything you have insured, or can insure. Think home, car, landlords, business insurance, truck, travel insurance, Accident & Sickness just to name a few.

What is the Market?

It is the group of insurers and underwriters (smaller, more nimble version of an insurer) with insurance products for Australia. Your trusted Ausure insurance advisor has access to over 160 (which is most of them) insurers and underwriters. We will take your entire portfolio of policies to the market at the same time, to show insurers they can have a crack at a bigger slice of your pie insurance portfolio. From there, we negotiate with insurers for terms suitable to you. We can also do it piece-meal if you prefer (i.e. as each policy comes up for renewal), but we tend to get better results doing it all together.

But my premium increased already with no claims?

This confirms we are still stuck in a Hard Market. You may find your trusted advisor has shown you the remarketing work they did for you, this year or even last year. Most often, the premium you see is the best on offer, based on comparable cover. But sometimes, your trusted advisor will recommend a higher premium because it offers more comprehensive cover for you…and hopefully fewer exclusions.

When does the soft market come?

Good question. There are a lot of factors that influence this, such as national and international economic states, environmental factors (cyclones, floods, fires etc) and legislation issues. We think this Hard Market could be here for a while to come, but the good thing is your trusted advisor will have their finger on the pulse. We will know when it changes and ensure your insurance portfolio moves with it.

Mick O’Bree
General Manager – Operations, Diploma of Insurance Broking

Mick’s career has included running a local brokerage to Managing Director Ausure Ruralco Pty Ltd. His experience and skill set include specialising in Risk Management, Business Insurance Planning, Insurance Advice and Change Management.

Mick’s current role as General Manager – Operations – has him working with Ausure and their trusted advisers overseeing the daily operations of Ausure Insurance Brokers.

 

 

Sources –
9News – Aussie homeowners face major hikes in insurance costs after string of natural disasters,  
State of the Market – Mecon Insurance

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