If you went to a market and saw 100 fruit stalls, you wouldn’t go to the first vendor. You’d likely visit a few, find out who sells the juiciest apples for a good price and buy from them. Then, if each stall was experiencing rising costs to grow the fruit, it’s unlikely that you will be affected too much; competition keeps quality high and prices low, after all.
The same can be seen in the business insurance market. There are plenty of insurers battling it out to show you their apples, making it a good time to buy. The recent downturn in Australia’s general insurance market may only increase this competitive nature.
According to the annual review of the Australian general insurance sector by Pendulum, Finity Consulting and Deutsche Bank, profitability for insurance providers are expected to shrink from margins of 17-18 per cent to 12-13 per cent, and stay there for the next three years.
This shouldn’t scare businesses or individual policyholders. In fact, those looking to buy or renew their business insurance may find that the market needs them more than ever, and insurers will improve their services to attract more business.
“Customers have become less loyal to insurers and brands, and have a high propensity to shop,” explained Finity Consulting Principal Andrew Cohen in a report by Insurance and Risk Professional.
For instance, the report shows 23 per cent of first-time buyers for motor vehicle insurance shopped around, while only 15 per cent did so five years ago.
And why not; you’re unlikely to visit each and every one of those fruit vendors, though the apple that best suits your particular taste may be hidden away at a stall near the back. With a little help, you can find a high-quality business insurance product that fits your organisation by using a broker that knows the entire market.
For help negotiating the competitive business insurance market, feel free to contact your local MGA professional.