On 28 March 2012, the Australian Prudential Regulation Authority released the Intermediated General Insurance Statistics for the six month period ending December 2011.

The Statistics indicate the level of general insurance business placed by intermediaries (general insurance intermediaries holding an Australian financial services licence authorising them to deal in general insurance products) with APRA-authorised general insurers, Lloyd’s underwriters and unauthorised foreign insurers (UFIs). The Statistics provide informative insight into the proportion of insurance that UFIs underwrite, the types of insurance and the location of UFIs.

This is the first time that APRA has published statistics on the amount of premiums which are placed with UFIs.1 UFIs carrying an insurance business locally (or deemed to be) are not regulated by APRA and do not need to comply with APRA’s prudential requirements for general insurers. UFIs are only permitted to insure an Australian risk if the risk falls within one of the following exemptions: at least one of the policyholders is a high-value insured (HVI exemption), the contract of insurance relates to a specified atypical risk (atypical risk exemption), the risk cannot reasonably be placed in Australia (customised insurance exemption), or the insurance contract is required by foreign law (foreign law exemption).

The Statistics indicate that:

  • value of UFI business: intermediaries invoiced $8.9 billion in premiums in the Period (an increase of $900 million from the same period in 2010). $912 million (10%) was placed with Lloyd’s underwriters. $685 million (8%) in premiums were placed with UFIs. Of the premiums placed with UFIs:
  • 63% of the premium placed with UFIs was in the fire and ISR class, an increase from 45% in the same period in 2010;
  • the average premium of a policy placed using the HVI exemption was $861,000 (an increase of $410,000 from the same period in 2010), while the total number of policies relying on this exemption decreased;
  • the average premium of a policy placed using the customised insurance exemption was $121,000, decreasing from $225,000 from the same period in 2010. This primarily resulted from a decrease in premiums rather than the number of policies;  
  • number of policies issued by UFIs: 3,200 policies were issued or renewed by UFIs. This is a decrease of 425 policies from the same period in 2010, which is attributable to a reduction in the number of policies issued or renewed using the custom exemption and the HVI exemption.  Of these policies:
  • 318 (63% of the total premiums invoiced) were in the fire and ISR class (with an average premium of $1.3 million);
  • 1,902 (16.4% of the total premiums invoiced) were in other direct classes (houseowners/householders, motor vehicle, consumer credit, travel, mortgage and employers liability);
  • 486 (4.1% of the total premiums invoiced) were in the marine and aviation classes;
  • 294 were in the public and product liability class;2
  • 183 (7.1% of the total premiums invoiced) were in the professional indemnity class;
  • 17 were in the “other accident” class.3
  • location of UFIs: 81% of premiums in the Period were placed with UFIs based in the United Kingdom, Singapore and Bermuda;

The Statistics indicate that the proportion of APRA-authorised insurer gross written premium placed by intermediaries was 45% for the six months ended December 2010 and June 2011.4

The next edition of the Statistics (for the six months ended June 2012) will be released by 5 September 2012.