Brokers, on the other hand, operate on behalf of the insured. A broker may provide advice on the nature and quantum of the cover required, in addition to obtaining insurance from an appropriate insurer at a competitive price. A more complex relationship is a arrangement where a broker is ‘binder’ delegated the power to grant final cover or settle claims. Despite notionally acting for the insured, a broker operating under a binder arrangement is also acting as an agent of the insurer. Benefits for consumers of general insurance One measure of the performance of the general insurance industry is the net loss ratio. The net loss ratio is the value of net claims incurred divided by net earned premium. As net amounts, the ratio excludes revenues from, and expenses related to, reinsurance. The net loss ratio shows the proportion of net premiums earned in a given year that are returned to policy holders as claims (net incurred claims) in a given year. Chart 3 shows the net loss ratio for the five categories of consumer-oriented insurance between the September quarter 2010 and the March quarter 2018. Chart 3: Net loss ratio by category of consumer-oriented general insurance September quarter 2010 to March quarter 2018 (4-quarter rolling average) Source: APRA, Quarterly General Insurance Performance Database March 2018 (24 May 2018). 3 shows that between the 2011 and 2017 years, there has been some variance in the net loss ratio within specific segments of the consumer general insurance industry. For example, CTP insurance at some points had a net loss ratio over 100%, indicating that net incurred claims was larger in that year than net earned premiums. The net loss ratio for CTP insurance has generally declined since 2015. By contrast, the consumer credit segment has maintained a relatively stable annual net loss ratio. The life insurance market In the year ending 31 2018, life insurers in Australia earned $18.3 billion in direct premiums from consumers. At 31 March 2018, the value of total assets held by life insurance companies in Australia was $230.1 billion.
Brokers, on the other hand, operate on behalf of the insured. A broker may provide advice on the nature and quantum of the cover required, in addition to obtaining insurance from an appropriate insurer at a competitive price. A more complex relationship is a ‘binder’ arrangement where a broker is delegated the power to grant final cover or settle claims. Despite notionally acting for the insured, a broker operating under a binder arrangement is also acting as an agent of the insurer. Benefits for consumers of general insurance One measure of the performance of the general insurance industry is the net loss ratio. The net loss ratio is the value of net claims incurred divided by net earned premium. As net amounts, the ratio excludes revenues from, and expenses related to, reinsurance. The net loss ratio shows the proportion of net premiums earned in a given year that are returned to policy holders as claims (net incurred claims) in a given year. Chart 3 shows the net loss ratio for the five categories of consumer-oriented insurance between the September quarter 2010 and the March quarter 2018. Chart 3: Net loss ratio by category of consumer-oriented general insurance September quarter 2010 to March quarter 2018 (4-quarter rolling average) Source: APRA, Quarterly General Insurance Performance Database March 2018 (24 May 2018). 3 shows that between the 2011 and 2017 years, there has been some variance in the net loss ratio within specific segments of the consumer general insurance industry. For example, CTP insurance at some points had a net loss ratio over 100%, indicating that net incurred claims was larger in that year than net earned premiums. The net loss ratio for CTP insurance has generally declined since 2015. By contrast, the consumer credit segment has maintained a relatively stable annual net loss ratio. The life insurance market In the year ending 31 2018, life insurers in Australia earned $18.3 billion in direct premiums from consumers. At 31 March 2018, the value of total assets held by life insurance companies in Australia was $230.1 billion.
some-features-of-the-general-and-life-insurance-industries-background-paper-26.docx