Commercial Insurance Premiums Continue to Fall Amid Intense Competition

The intense competition in the commercial insurance sector is driving down premiums, with the clients of 53% of brokers experiencing a reduction in insurance premiums. The trend was most marked in the public liability sector, where 33% of respondents reported a drop in premiums by between 10% and 19%. However, analysts are playing down any threat to insurers' profitability, citing favorable economic conditions and a lack of major claims.

Key Takeaways:

• 53% of clients of insurance brokers experienced a reduction in premiums.
• The trend was most marked in the public liability sector, with 33% of respondents reporting a drop in premiums by between 10% and 19%.
• Analysts are playing down any threat to insurers' profitability, citing favorable economic conditions and a lack of major claims.
• CSFB analyst Arjan van Veen has Promina on an outperform rating, despite negative sentiment affecting the shares.
• Goldman Sachs JBWere analyst Ryan Fisher acknowledged that investor sentiment had turned against the domestic general insurers, but expects them to perform well in the reporting season.
• The bombings in London are not expected to have a significant impact on insurance premiums.
• Personal lines are growing at a rate of 10% per annum.

Statistics:

• 53% of clients of insurance brokers experienced a reduction in premiums.
• 33% of respondents in the public liability sector reported a drop in premiums by between 10% and 19%.
• Promina's shares have dropped below $5 after soaring close to $5.50 in February.
• S&P/ASX 200 Index has climbed to fresh highs.
• Personal lines are growing at a rate of 10% per annum.

Sources:

• National Insurance Brokers Association (NIBA) survey
• CSFB analyst Arjan van Veen
• Goldman Sachs JBWere analyst Ryan Fisher
• Australian Securities Exchange (ASX)
• Standard & Poor's (S&P)