Australian insurers remain resilient despite lower premium hikes: S&P | Asian Business Review
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Australian insurers remain resilient despite lower premium hikes: S&P

79% of rated Australian insurers have stable rating outlooks.

The Australian insurance sector is expected to remain resilient as operating challenges ease in the coming years, according to S&P Global Ratings.

"Premium rate increases have more than countered earnings pressure from claims inflation in all sectors excepting mortgage insurance," S&P Global Ratings credit analyst Julian Nikakis said in a media release.

"The earnings lift from higher premium rates will continue to offset reinsurance rate pressures, and higher spending on technology, cyber defence, and regulation."

In the ratings agency’s new report, "Australian Insurance Sector Trends: A Return To Underwriting Fundamentals.", insurers will likely lower premium hikes in response to moderating inflation, yet profitability should remain strong across all segments.

The report predicts that insurers' earnings will stay solid over the next two years, with capital adequacy remaining a key credit strength across all segments. 

The creditworthiness of Australian insurers is expected to stay stable through 2024 and 2025, with approximately 79% of rated Australian insurers having stable rating outlooks.

Australia's supportive and stable economic environment, bolstered by effective public policymaking, continues to enhance the sector's resilience to external shocks and supports sustained profitable growth for insurers.

 

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