Catastrophic events like bushfires, cyclones, and COVID-19 are having the biggest impact on insurance around the world, forcing price increase across property, financial and professional risk policies.    

In early 2020, The Insurance Council of Australia estimated the claims totals from last summer's bushfires and hailstorm events would reach $3 billion.

The latest numbers put the cost at nearly $5.19b and it's expected the most recent storms will add another $270 million lodged in the past four weeks.   

Marsh's quarterly Global Insurance Market Index, estimates composite pricing movements in excess of 23 per cent in Q4.

Insurers are less willing to take risks due to:

• Increasing claims 
• Increases in the severity and frequency of natural disasters
• Increased reliance on modelling and 'technical' underwriting
• Equity markets increasing exposure to economic impact     
• Political instability around the work caused by the US elections, trade wars and geopolitical unrest.

Stricter terms and conditions and pricing increases are predicted to continue well into 2023.

LGIS is committed to the sustainable protection of the sector.  

Therefore, while the commercial market has little appetite and ability to withstanding these increases, LGIS has made concerted efforts to limit contribution volatility. 

This is in addition to the $7 Million package to assist members with their contribution payments.   

We have developed our protection and reinsurance structures over a number of years to reflect the complexity of local government and commercial insurers have not been able to match it.

While LGIS is not immune to the impacts on the wider insurance market, the risk-based approach we have taken provides us with a stronger negotiating arm.    

Significant weight is applied by reinsurers on risk management practices and controls implemented by members in addressing sector-specific exposures.  

LGIS have developed targeted campaigns to address risks affecting local government and put in place new strategies to decrease the impact they will have.

The LGIS model reduces the impact of global events on insurance and the expansion of the Scheme provides members with greater stability across a wider range of areas.

Look out for the winter edition of Risk Matters for an in-depth look at current market conditions. 

For more information on how market trends could affect you call your member services account manager.