INSURANCE customers, particularly in the property and aviation industries, could be in for a nasty Christmas present when their insurance premium bills come in.
While insurance premiums have been on the rise for the past 12 months, another big slug is expected when some insurers renegotiate their reinsurance policies – around December.
That is when the impact of the September 11 terrorist attacks on New York and Washington is expected to be felt.
The reinsurers have taken a huge hit from the damage caused by the terrorist attacks and will pass it on to their customers.
One Australian insurer, QBE, was among the first in the insurance sector to bear the brunt of the damage.
Those insurance company customers are expected to pass the hit on to their customers.
Instead of carrying all of the risk they are insuring against, most insurance companies opt to take reinsurance. That reduces the amount of risk they are carrying.
Aon Risk Services’ Chris Fitzgibbon said reinsurers had marked insurers down to the capacity they could take.
“Insurers have been asking for price rises to pay for their growing reinsurance costs,” Mr Fitzgibbon said.
Smith Coffey Insurance Brokers director Rod Tancred said the areas of property and liability insurance would certainly go up.
“Premiums have been going up for a while, but now the effects of the terrorist attacks will start feeding through,” Mr Tancred said.
A spokeswoman for SGIO said the company had no immediate plans to raise premiums.
“We will continue to price premiums based on individual risk factors. We don’t have a blanket price policy,” she said.
