Contact: Louise Denver
Deloitte
FSI Communication Consultant
02 9322 7615

Contact: Paul Franks
Deloitte
Sydney Practice Leader, General Insurance
(61-2) 9322 7073

Contact: Elaine Collins
Deloitte
Partner, Trowbridge Deloitte
02 9322 7533

Contact: Matthew Sullivan
JPMorgan
Corporate Communications
02 9220 3138

The JPMorgan Deloitte 2006 General Insurance Industry Survey released today highlighted that industry profitability is extremely high with combined ratios of 84.7% and warned that intense competition would constrain future top-line revenue growth and continue to put pressure on margins.

At the launch of the JPMorgan Deloitte 2006 General Insurance Industry Survey, Shane Fitzgerald, Senior Insurance Analyst at JPMorgan said, “The current levels of profitability are extremely high.  Any moderation in profitability that may occur would be coming off a very high base.  And any fall in profitability is still likely to see the industry generate good returns. 

“However, the current levels of profitability are not sustainable, and the high level of competition is proof of this,” he said.

The survey revealed that while personal premium rates remain relatively stable and commercial premium rates are falling by 9 % across all lines, APRA statistics show that the industry’s return on equity is at an all time high at 23.1 %.  The combined ratio of personal and commercial classes of insurance is also at its lowest recorded level in the modern history of the industry at 84.7 %.

Deloitte partner, Paul Franks, said that last year the survey participants predicted a deterioration of at least 300 basis points in 2006 and although it had fallen 100 basis points it isn’t as bad as expected.

Please see the full media release and survey, executive summary below.