Gold Coast City Cultural Summit

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Gold Coast City Cultural Summit Public Liability
Insurance forCommunity Organisations
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Agenda

• The Current State of Global Insurance Markets
• Structure of Public Liability Policies
• Shareholder Expectations
• Insurance Market Cycles
• Unauthorised Foreign Insurers
• Civil Liability Act 2003

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Current State of Global Insurance Markets

• Insurance premiums have historically been
  underpriced based on industry margin and
  profitability.
• Australian policyholders have been getting a
  free ride in the form of unduly cheap premiums
  for a number of years and they now need to accept
  that this was an aberration that may never
  recur.
• Dr. D. Roberts, APRA, 9 July 2002

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Current State of Global Insurance Markets (Cont.)

• Shareholders
• Low Growth
• Poor Profitability
• Lost Capital 200 Billion
• Underwriting Losses
• WTC Claims
• Poorly Performing Investment Markets
• Increased Reserves
• Asbestos
• Professional Liability
• Environmental Liability
• Toxic Mould

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Current State of Global Insurance Markets (Cont.)
Results?

• Back to Basics Mentality
• Higher Premiums
• Retention Increases
• Narrowing Coverage Conditions
• Limit of Indemnity Reductions
• Withdrawals from Selected Classes
• More Scrutiny of Risk Exposure

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Structure of Public Liability Policies
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Shareholder Expectations

• Improved Returns
• Minimise Earnings Volatility
• Reasonable Return on Capital Outlaid

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Insurance Market Cycles
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Unauthorised Foreign Insurers

• Australian Prudential Regulation Authority (APRA)
• Updated Prudential Standards
• Unauthorised Foreign Insurers
• No Presence in Australia
• Do not comply with APRA Minimum Capital
  Requirements
• Often not rated by Standard Poors / AM Best
• Based in Warsaw / Marshall Islands / Cayman
  Islands / Serbia / Vanuatu

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Civil Liability Act 2003

• The IPP Report
• Queensland Civil Liability Act 2003
• Relates to Personal Injury / Property Damage and
  Economic Loss
• Test of Negligence
• General Damages

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The Future?

• The hard market will continue for the next few
  years.
• It remains a sellers market insureds must
  compete for insurers capital.
• Insurers continue to refuse cover for certain
  classes of risks.
• Insurers are asking for more risk and exposure
  information.
• Insurers are making risk improvements mandatory
  and imposing premium payment warranties.