Insurance News Magazine – December 2022 / January 2023

From the Publisher

2022 has been a year like no other. War in Europe, China’s increasing belligerence and lockdown mania, the threat of a global recession, inflation, restless cities, natural catastrophes worldwide…the list is long and in an interconnected world the impacts are vast.

Not least, of course, for Australia. Cracks are appearing in the wall of Australia’s insurance dam. Massive rainfall totals and resulting floods during 2022 have caused reinsurers to think twice about Australia’s place in the reinsurance sun as a small but stable and predictable market, where natural catastrophes occasionally happen in small pockets of the country. The sheer amount of territory consumed by these floods will inevitably result in property insurance premiums continuing to rise.

Our cover article in this edition of Insurance News features QBE Group Chief Executive Andrew Horton, who warns of an imminent crisis in the industry as reinsurance rates rise and availability falls. He sees capacity shortages intensifying as the reinsurers scramble to keep up with the rising cost of record wildfires, floods and windstorms around the world.

This is going to put brokers on their mettle, and we are quite likely to see some new approaches to transferring risk emerging to deal with the lack of local capacity. Necessity is the mother of invention, and this time around we certainly need innovation and more thinking outside the traditional box.

Out of adversity there is one glimmer of positivity: insurance and climate change-related issues and options are at last being openly discussed and debated.

The federal and state governments now appreciate the need for action to ensure Australians, their property and their businesses, are able to secure affordable insurance.

After so many years of blinkered conservative politicians and bureaucrats ordered to silence, the emergence of a new attitude to climate change is very positive. But it won’t bring back cheap property insurance; climate change means severe weather risks are here to stay.

While this has been the kind of year that the late Queen Elizabeth once so aptly dubbed an “annus horribilis”, we’re at the time of year where the sun should shine and many Australians can relax. Not so much in the insurance industry, however, where the scale of the disasters being handled are likely to keep many seated at a keyboard. To them and our thousands of readers, the team at Insurance News extends to you the compliments of the season. Enjoy, and stay safe.

Terry McMullan