IP, Public and Product Liability Claims Drop: APRA Data – Local Insurance News
According to data from the Australian Prudential Regulation Authority (APRA) released today, claim payments for professional indemnity (PI) and product and liability fell in 2020 compared to the previous year .
Payments for PI claims fell 10.2% to $977 million and liability and product liability fell 6.8% to nearly $1.13 billion.
National Claims and Policy Database figures relate to non-facility business written by APRA-regulated general insurers.
The number of claims for which PI payments were made decreased by 2.2% to 18,143 and for product and liability it decreased by 1.4% to 34,953.
PI gross premium increased 17% to nearly $2.62 billion in underwriting year 2020 compared to 2019 and product and liability increased 7.5% to $2.62 billion. .91 billion dollars.
The database also provided figures for Lloyd’s Australia, but APRA says it is difficult to compare them with other insurers given the specialist nature of the Lloyd’s market which underwrites larger and more complex risks at higher premiums.
Lloyd’s PI claims payments for non-facilities business fell 18% to $88 million, but the number of claims for which payments were made rose 46% to 441.
For product and liability, claims payments increased 4.6% to $83 million and the number of claims for payments made increased 29.1% to 674.
PI gross premium reached $521 million in the 2020 underwriting year and for product and liability it totaled $131 million. APRA data did not provide figures for 2019.
For the facilities business, Lloyd’s recorded $459 million in gross premiums and a 14.3% increase in claims payments to $425 million.
APRA also released data on claims trends for the long- and short-tailed classes in a separate update last week.
In the long tail classes, Compulsory Third Party Engines (CTP) recorded an estimated ultimate loss ratio of 84.4% for the 2021 accident year, $3.3 billion in gross earned premiums, $2.79 billion of gross ultimate costs and $112 million of gross claim payments.
APRA says that in fiscal year 2021, reserve levels from the prior year remained largely unchanged, with the only significant reserve release occurring in accident year 2020.
“This could be explained by the reforms to the NSW CTP scheme which came into effect in 2017,” the regulator explains.
In other long-tail categories, product and liability ultimate loss ratio was 51.9%, gross earned premium was $3.04 billion, gross ultimate cost was $1.58 billion and gross claims payments at $96 million.
PI had an ultimate loss ratio of 66.7%, $3.19 billion in gross earned premiums, $2.13 billion in gross ultimate cost and $129 million in gross loss payments.
In the short-tail categories, homeowners had an ultimate loss ratio of 62.1%, gross earned premium of $10.18 billion, gross ultimate cost of $6.33 billion, and payouts gross claims of $3.32 billion.
Domestic Auto had an ultimate loss ratio of 60.7%, gross earned premium of $10.96 billion, gross ultimate cost of $6.65 billion and $4.87 billion in loss payments gross.
Fire and Industrial Special Risks (ISR) recorded an ultimate loss ratio of 59.3%, gross earned premiums of $6.39 billion, gross ultimate cost of $3.79 billion and gross loss payments of $987 million.
APRA indicates that the estimated ultimate loss ratio of 59.3% for the 2021 accident year is lower than the 10-year average of 69.6%.
The surge in the ultimate loss ratio for the 2020 accident year was driven by revised provisions for pandemic-related business interruption (BI) claims at the end of December 2020, the regulator said.