2023 is likely to be a more challenging year for the Australian economy, given the impact of elevated inflation, rising interest rates, and the risk of a slowdown in major global economies. Cost-of-living pressures, combined with increasing business costs, will likely impact demand in the second half of 2023. That said, Australia has been protected from US & European recessions and slow down within China by low unemployment and accumulated savings, providing capacity to navigate more challenging conditions.
The combined impact of economic and geopolitical crises is causing virtually unprecedented complexity in the business environment for insurers and reinsurers worldwide. High inflation is having a profound effect on loss expectancy in many classes, especially property.
The Eastern Australian flood in late February and early March 2022 was the most significant loss event outside the US last year, according to the latest CRESTA Industry Loss Index. It is now the largest flood loss ever recorded here, costing the industry $4.8 billion.
With many reinsurers heavily impacted by Hurricane Ian in Florida, US, last year, we anticipate the impact will continue to restrict capacity and increase rates for the coming year across Property & Casualty classes. Our partners at Lloyd’s of London predict continuing rate strengthening to keep up with claims inflation for the coming year.
The market conditions are dictating brokers’ need to look beyond the major insurers for placement solutions which mean 2023 is shaping up to be another exciting year for Australasia Underwriting. Responding to the capacity challenges we continue to expand our underwriting appetite. January will see the launch of our new Product Innovation Lab which will mean we will be able to bring new solutions to market in record time.
Our solution-first approach is really gaining traction with our selected broker partners. Transparency of underwriter rationale – explanation of decision-making and impact on insurance acceptance and cost is a fundamental component of our proposition. Taking the time to have these discussions benefits our relationships both with brokers and our clients. To encourage more conversations, we are expanding our expert underwriting team and embracing technology to improve the speed of decision-making to deliver further support when our brokers need it.