This upward trend in premiums is largely attributed to a worsening claims experience, particularly in relation to bodily injury claims. The average size of finalized bodily injury claims has been increasing by 5.5% annually since 2013. Notably, work injury claims have doubled in size compared to other bodily injury claims, contributing significantly to the overall cost pressures.
In response to these rising costs, many businesses are opting for policies with higher deductibles, effectively assuming more risk to manage premium expenses. While this strategy may offer short-term financial relief, it also exposes businesses to greater financial vulnerability in the event of a claim.
The data also highlights a rise in psychological claims, which further exacerbates the overall inflation in claims costs. Factors such as social, legal, and medical developments are contributing to this trend, indicating a complex landscape for insurers and policyholders alike.
For Australian businesses, particularly small and medium-sized enterprises (SMEs), these escalating insurance costs present a significant challenge. It is essential for business owners to stay informed about market trends and consider proactive risk management strategies to mitigate potential liabilities. Engaging with insurance brokers to explore tailored coverage options and implementing robust workplace safety measures can help in managing insurance costs effectively.
In conclusion, APRA's latest data underscores the need for both insurers and businesses to adapt to the evolving insurance landscape. By understanding the factors driving premium increases and implementing strategic measures, businesses can better navigate the challenges posed by rising public liability insurance costs.
