Insurance giant edges out of NQ

ONE of the world’s largest insurers is withdrawing from the market for North Queensland properties worth more than $ 20 million.

AIG confirmed the change after brokers JLT disclosed the strategy in a report to clients, saying it was related to huge losses from last year’s US hurricane season, where damages are approaching $ 200 billion.

But an AIG Australia spokesman said it was a “local decision”, unrelated to events in the US.

“As a result of losses sustained within our commercial property portfolio emanating from both natural catastrophe and risk events, a review of the portfolio has been completed and remediation strategies agreed to bring the portfolio back to long term sustainable profitability,” head of property and special risks for Greater China and Australasia Nick Wood said in a statement.

“Our decision to cease writing specific large commercial property risks in North Queensland is part of that remediation.”

The move will reduce competition and could lead to further premium rises in a market where prices have only just stabilised following the shock of Cyclone Yasi and the Brisbane floods in 2011.

Mr Wood said their withdrawal impacted only a “handful of accounts” and these risks would be “easily absorbed” in the market.

But others had a different view. The JLT report said the North Queensland market was in a “hard to place cycle” with insurers generally looking to reduce or hold their exposure to catastrophic events.

A partner of body corporate managers Archers, Andrew Staehr, said they had noticed premiums increasing across Queensland over the past year and people in large buildings in North Queensland could see further increases with AIG’s withdrawal.

“We are seeing price increases across Queensland of anywhere from 10 to 25 per cent ( over the past year),” Mr Staehr said.

“I think for those larger buildings in excess of $ 20 million ( in value), they can expect premium increases because there really is only two or three ( insurers) if they are lucky.”