Market 'worst in my career', says Steadfast CEO

Steadfast MD and CEO Robert Kelly says 2023 will be a “difficult year” as significant industry challenges coincide.

“The market is the worst I’ve ever seen in the 54 years I have been in insurance,” he told insuranceNEWS.com.au from the Steadfast Convention in Perth.

He says structural change at insurers, the continuing level of attritional claims, and the increasing number of weather events and associated escalating claims costs are all having an impact.

“On top of that at the moment you are seeing the rationalisation by the international reinsurers to say enough is enough, and the pricing mechanisms are not negotiable.

“It’s a lot of change and if you put all that together it’s going to be a very challenging time.”

Insurers are behind on technology, he says, and are stuck with “antiquated” systems.

“The transition to digitally communicating with people is a little slower than it should be, and to come up to date with their technology is a big cost.

“Then there’s inflation on wages, and we are seeing the insurers struggle with their profit and loss because they have such a large wage bill for their staff.

“They are struggling with their wage bill, and with their technology which is antiquated and behind the eight ball, and the intermediaries are struggling to get competitive markets in an industry where there’s very little competition in terms of pricing.

“2023 is a difficult time to be in insurance.”

Mr Kelly says the increased frequency of weather events in Australia is causing issues with availability and affordability of insurance in some areas.

He is encouraged by build-back and buy-back schemes in NSW and Queensland but would like to see the cyclone reinsurance pool expanded.

“You can’t say flood cover is available when it is not affordable in certain areas,” he said.

“And the lack of mitigation of flooding in Australia is a disgrace for councils, the states and Federal Government. It’s insane that we are still allowing people to build in what I would call river deltas.

“The first highlight for me is that are going to start plot-swapping in Lismore.”

He says the cyclone pool is “a start” but that Australia needs a broader disaster pool.

“Let’s not be too critical of it, but it’s a little toe in the water at this stage.

“It’s a named cyclone pool. Unfortunately over the past 18 months all the weather events in Australia have not been named cyclones and we have had the worst flooding we’ve ever had.

“So you have to say to yourself it’s a start, it will mitigate some areas, but certainly we need to expand it from named cyclones.

“But at least we have got the makings of a pool and we have capital allocated to it and insurers can offset commercial pricing to this federal pool controlled pricing, and it should give some respite in the ultimate end pricing to the consumer.

“It’s just a toe in the water, we need to get the other four toes into it.”