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APRA also found that large reserve releases occurred regularly in all prior occurrence years, albeit at lower levels than in recent years. These were mainly concentrated in the accident years up to five years before.
For civil liability and products over the same period, the estimated ultimate financial loss ratio of 55.9% was in line with recent occurrence years at the same stage of development. APRA has also seen some build-up in reserves over the last few years of the accident.
“A strengthening of reserves is noted for fiscal years 2020 and 2019 and contrasts with the releases of reserves in previous years,†APRA said in the report.
For professional liability in fiscal 2020, APRA reported an estimated ultimate loss ratio of 67.0%, slightly above the 2019 level at the same stage of development – with premium increases offset by increases in claims expected future.
The regulator has also seen a build-up in reserves in all of the recent accident years, which matched an increase in class actions.
Read more: APRA releases latest life insurance statistics
For employers’ liability in fiscal year 2020, the APRA report revealed an estimated ultimate loss ratio of 73.6%, slightly lower than the last years of occurrence at the same stage of development and driven by increases bonuses.
The report noted a significant transactional impact on the 2015 accident year data, adding that “excluding the impact of this transaction, the ultimate loss ratio for the 2015 accident year would be around 75%. “
For homeowners and households, APRA reported an estimated ultimate loss ratio of 81.0%, higher than the 10-year average of 59.0%, mainly due to the negative impact of natural disasters on the costs of property. claims from insurers.
“Given the short nature of claims in this category of business, the final estimate of claim costs for a particular occurrence year does not change much over time,” the report says.
For domestic auto claims, APRA reported an estimated ultimate loss ratio of 64.4%, below the 10-year average of 66.9%. The regulator said the latest figure was the result of a reduction in the frequency of complaints due to community lockdowns initiated by the government in response to the COVID-19 pandemic.
The APRA also noted that the fire and ISR claims for the accident year 2020 resulted in an estimated ultimate loss ratio of 92.4%, higher than the ten-year average of 77.7% and driven by revised provisions. for claims related to a business interruption (BI) related to the pandemic at the end of December 2020.
“This represents the BI provisions declared by insurers with balance dates of December 31 only, because data on the development of claims are submitted to APRA each year and after the insurers’ balance date”, a added APRA.
Finally, the ultimate loss ratio estimated by APRA for commercial vehicle claims was 61.0%, slightly lower than the ten-year average of 68.8% – continuing a recent downward trend due to the growth in premiums and the reduction in the frequency of claims linked to the pandemic in 2020.
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