Commercial property insurers have been warned to get their house in order amid unceasing evidence of volatile product pricing and underwriting standards or face stricter supervision, it has been reported.
Australian Prudential Regulation Authority (APRA) insurance chief Geoff Summerhayes said the regulator might have to step up its supervision of the sector should commercial property insurers fail to resolve ‘stability and sustainability’ concerns, Fairfax Media
Summerhayes said: "When we see deterioration in key product areas over time, we need to ask the question: how are insurers managing this risk and how sustainable is the current situation?"
During an insurance conference in Canberra, Summerhayes said there had been recent signs of price stabilisation but it was too early to predict whether it would endure, Fairfax Media
In a recently published review, APRA highlighted concerns within the sector as well as made recommendations for improved governance, including creating product and pricing committees and improving strategies for managing pricing risk, the report said.
Insurance, among other industry groups, has also highlighted the concerns, noting the deterioration across many insurance sectors, including commercial property as ‘disappointing and unacceptable.’
The APRA chief said the regulator was closely monitoring commercial claims trends and loss ratios, and that there were no plans to debate price setting with insurers, Fairfax Media
"While we are comfortable to leave any necessary corrections to industry now, we will adjust our supervisory intensity in response to worsening trends," Summerhayes said.
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