Insurance market still has home bias
Despite the growing number of insurers within the Australian market less than 10 per cent of premiums were placed with foreign insurers, according to statistics released by the Australian Prudential Regulatory Authority (APRA).
In its Intermediated General Insurance Statistics, which covers the six months to the end of 2013, APRA stated that while $9.8 billion was invoiced as general insurance premiums in the period, only $802 million was placed with unauthorised foreign insurers (UFIs).
In comparison $8 billion or 82 per cent of premiums was placed with APRA-authorised general insurers, while a further $1.0 billion or 10 per cent of premiums was placed with Lloyd's underwriters.
APRA states UFIs are foreign-domiciled insurers permitted to carry on insurance business in Australia under limited exemption arrangements but are not regulated by APRA. They are also not required to comply with APRA's general insurance prudential requirements.
Of the premiums placed with UFIs, $258 million was placed with insurers in Singapore and $329 million with insurers in the United Kingdom, representing 73 per cent of UFI-placed premiums. These premiums were usually for fire and industrial special risks insurance.
APRA also stated 1582 intermediaries were licensed to conduct general insurance business and 55 per cent placed business directly with underwriters. Of that number 96 per placed business with APRA-authorised general insurers, 27 per cent with Lloyd's underwriters and 8 per cent placed business with UFIs.
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