When will insurers cut premiums? Here’s what the global giants say

afr.com:

London | When Assistant Treasurer Stephen Jones sat down with reinsurance execs in their HQs in London and Munich, he was surprised to find them bringing up an inland Queensland town with a population of just 7000 people.

“They were telling me the story of levees in Roma,” Mr Jones told The Australian Financial Review on the final day of his European tour.

“They said: ‘You built the levee in Roma, that made a massive difference. It cost you about $30 million. But it means the town of Roma doesn’t flood anymore. And that changes the way we would assess risk in that area’.”

Assistant Treasurer Stephen Jones was in London to meet reinsurance execs as he looks for ways to cut premiums. 

The reinsurers were trying to answer the question that Mr Jones and his delegation of Australian insurance industry executives had brought with them in their briefcases: what would it take for you to lower the cost of insuring Australia?

As any Australian who has had a letter from their insurer lately would know, home insurance premiums have been soaring. The Actuaries Institute said last month that the cost had jumped 28 per cent in a year, making them unaffordable for more than a fifth of households.

“Dig under that and ask what’s driving the sticker price of insurance, and up to 30 per cent of the sticker price of an insurance contract is the reinsurance cost,” Mr Jones said.

Climate change is driving up the frequency and severity of natural catastrophe events. According to Fitch Ratings, in the first half of this year insured losses worldwide hit $US53 billion ($83 billion), 47 per cent above the 20-year average. Last year was the reinsurance industry’s third most costly for weather-related events, after 2017 and 2005.

The reinsurers –