Australian non-life insurers' 2005 profits to withstand softening cycle: Standard & Poor's Ratings Services latest report card on Australia's non-life insurance industry indicates that strong profit levels will be maintained in fiscal 2005 despite the softening insurance cycle now entrenched in commercial lines (1).(INSURANCE TRENDS)

Publication: Journal of Banking and Financial Services

Publication Date: 01-JUN-05

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COPYRIGHT 2005 Australian Institute of Banking and Finance

The softening insurance cycle has become clearly entrenched in commercial lines in Australia. Premium rate reductions of between 5 per cent and 20 per cent have been recorded across various lines of commercial business renewed in the first quarter of 2005. Large corporate risks, particularly property and liability lines, have already experienced rate reductions of between 5 per cent and 20 per cent, and rate pressures are now becoming evident in mid-size commercial risks. Despite these rate reductions, policy terms and conditions remain strong, and the extensions of cover and reduced excesses apparent in the last softening cycle have not yet appeared in the local market.

Reported profitability remains very strong for the industry for results up to December 2004 and, importantly, many insurers show continued signs of lower claims frequency across many lines of business, in particular, liability lines....

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