The cost of household and motor vehicle insurance might be surging, but business insurance prices are falling and may still have some way to drop.
A survey by the National Insurance Brokers Association of Australia has found that 23% of brokers believe the cost of business insurance has fallen and 50% said premiums had stayed the same. This was mainly due to fierce competition in the commercial sector.
While rates for some commercial lines have increased (particularly public liability and business interruption insurance) there have been decreases in the costs of directors’ and officers’ liability insurance and professional indemnity insurance.
Noel Pettersen, the chief executive of NIBA, says his members are telling him the prices for commercial insurance lines are yet to hit the bottom, but warns the good times won’t last forever. “We would expect to see the decreases start to turn around in the coming months.”
The reason? Poor investment returns from global equity markets have dented insurance company profits and this will force them to milk their customers. “It certainly has been a buyer’s market in recent year,” Pettersen says. “But we’re part of the global market really and we are caught up in that cycle. Inevitably prices on commercial lines will move up because that’s the way the cycle works.”
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