Price hikes hit across the board

All lines affected: Macquarie

PRICES have leapt across almost all insurance lines, a pricing report from investment bank Macquarie has revealed, with insurers raising prices for new customers after months of passing on costs to existing policyholders.

The report from Macquarie analysts found premiums on home insurance policies surged 7.6 per cent in the 12 months to the end of December, with increasing gaps emerging between the two major players in the markets.

Macquarie found Suncorp’s pricing for new home policies was steeper than Insurance Australia Group’s.

Suncorp lifted pricing on its home policies by 11.6 per cent in the year, while Macquarie noted IAG had priced in a 3.9 per cent increase. GIO topped the tables for premium rate changes at 21.1 per cent, followed by Coles Insurance, where prices soared 18.4 per cent.

Macquarie said price increases to new customers accelerated in the December 2022 quarter and were now slightly ahead of premium rises being passed on to existing business.

This comes after six quarters in which price rises to existing customers have exceeded those passed on to new policyholders.

Despite the price pressure in home lines, Macquarie noted pricing was proving more punishing in commercial lines.

Macquarie analysts found a 13.9 per cent lift in premiums across commercial lines for small and medium businesses in the 12 months to the end of December, headlined by spiralling workers compensation policy costs.

Macquarie reported that pricing on commercial car insurance was up 10 per cent in the 12 months.

IAG’s CTP pricing was down 3.6 per cent, but Suncorp benefited from repricing in NSW with premiums up 1.9 per cent.

Macquarie said pricing across commercial lines of insurance were at all-time highs, but analysts expect the heat to dissipate in the next six to nine months. But they warned price rises across all insurance lines would not come to zero for at least another 12-18 months, according to “industry feedback”.

An Insurance Council of Australia spokeswoman said costs growth projected in Macquarie’s analysis was “broadly in line with inflation figures generally”.

“Insurers are working hard to keep downward pressure on price increases,” she said.

The run of premium price rises comes as the insurance industry faces down consecutive years of natural catastrophes, which have sapped profits.

IAG chief executive Nick Hawkins said the listed insurer was seeing claims, costs, and supply inflation.

“All the things we’d expect, and against that we do have higher investment income and yields are up with interest rates up,” he said. “We’re seeing it moderate a little bit – but I don’t see it turning and so the outlook at the moment is to continue to see pricing flow through the market.”