Insurance premiums in Australia have generally started to increase, due to higher re-insurance costs as a direct result of natural catastrophes over the last 12 months in Australia and poor underwriting performance. The rural insurance market too has hardened, some insurers have pulled out of the market altogether and unfortunately this may mean an increase in premiums for some agribusiness products. This makes dealing with a broker like AgriRisk, who can shop around for the best deal, a sensible option.
Why have some premiums started to increase? Australian insurance companies rely on the international reinsurance market to transfer risk they don’t want to (or can’t) retain in house. This protection comes at a cost that is currently increasing as a direct consequence of the natural catastrophes that have occurred both locally (NSW, Queensland and Victorian floods, Cyclone Yasi) and internationally (Japanese and Christchurch Earthquake and US tornadoes).
Some insurers have been unable to absorb these higher reinsurance costs and so have started to increase premium rates across the property insurance classes, while others have withdrawn from the market altogether. Fortunately we haven’t seen these rate increases start to filter down into the Crop Insurance market, but there will be increasing pressure on rural insurance such as ‘farmpack’ type policies where there is already a limited number of insurers operating in the market.
For the 2012 season AgriRisk anticipates upward pressure on premium rates for winter broadacre crops as competitive pricing over the last few years has undermined insurer’s financial results. With most other crops still exposed to summer-based perils it is too early to predict what lies ahead in terms of rating on other crops such as cotton, forestry, horticulture and viticulture.