"It’s a good time to be a good broker" says expert

Head said Australian insurers, including Insurance Australia Group (IAG), QBE and Suncorp, described their August results with quite similar messaging.

“They all benefitted from solid GWP [Gross Written Premium] or top line growth, ranging between six to 13% and this was mainly a result of premium rate increases on renewals, rather than new business,” said Head.

While noting claims inflation and coverage issues, he said these results still suggested the hard-working broker can achieve very positive client outcomes.

“It’s about really understanding the insured’s risks,” said Head. “You’ve got to have good detail on the policyholder’s risks and work hard with insurers and really engage with clients and insurers to get a good result.”

He said despite the ongoing “somewhat” hard market there is enough capacity and insurer appetite.

“Brokers have just got to work harder to find it,” said Head. “You’ve got to do things like look at, potentially, alternate capacity overseas and also other ways to design an insurance program, for example, using deductibles.”

Read more: Insights for brokers from insurers’ FY22 results

He suggested that, especially for more complex insurance needs, an insurance program can be built from good information, a strong understanding of a client’s risks and careful use of mitigation.

However, he warned brokers that the recent financial results also imply that insurers are not going to take on risks for the sake of their top line.

“They’re [insurers] going to scrutinize very closely,” he said. “So as brokers we need to be working with policyholders to make sure they are presenting their risk in the best possible light, they’re taking all remedial action possible and then demonstrate this to an insurer to give them comfort to take on the risk.”

Honan, he said, adopts this approach with their clients and uses insurers’ financial results to understand what insurers are doing in different sectors.

“When we boil it down to policyholders, we look at what’s their loss ratio and which insurers have got appetite for this type of occupation,” said Head.

One insurer Head spoke to made it clear that the manufacturing and wholesaling sectors were now an area of focus for them.

“Whereas they were steering away from hospitality and leisure,” he said. “Another insurer is out of appetite for trades and construction because of their exposure to worker-to-worker type claims.”

Despite these coverage issues and premium increases Head said there is “still ample capacity” in the market both in Australia and overseas and also signs that capacity is opening up.

Read more: IAG releases annual results

Last month, Head put a “broker lens” on insurers’ FY22 financial results.

Suncorp achieved top line growth, he said, and also improved both its loss ratio and combined operating ratio. However, its profit was impacted by natural catastrophes.

“They also specifically called out the impact of investment returns on their overall results,” said Head.

Insurance Australia Group (IAG) also achieved top line growth but appeared to be more impacted by natural catastrophes which he described as a “a very consistent theme.”

“The main difference in IAG compared to other insurers was their call out around the impact of long tail or their casualty portfolio, and specifically, worker to worker injuries and returning workers and also silicosis from prior years,” said Head.

The Honan data and analytics specialist said this impact could be seen “right down the chain” including CGU, the insurers’ main intermediated brand.

“They’ve [CGU] got less appetite towards casualty business at the moment, I think as a result of their [IAG’s] overall results,” said Head.

QBE‘s half-yearly results showed a 1% improvement in their combined operating ratio.

“QBE were very pleased with the improvement,” said Head. “Particularly in Australia, where it achieved a 90% – which is certainly a hurdle for combined operating ratio, which most insurers want to be on the better side of.”

However, like IAG and Suncorp, its results were “mainly offset” by the flooding disasters across Australia’s east coast earlier in the year.