QBE (ASX:QBE) warns of inflation driving up insurance premiums

QBE chief executive Andrew Horton says the pace of inflation will have a key impact on insurance premiums, which continue to rise as Australian insurers continue to grapple with a spate of catastrophe claims.

The global insurer was the last in the industry to forecast further rate increases after posting a profit of $151 million in the first half, a sharp decline from $441 million last year. However, the result sparked a 3.6 percent surge in QBE’s share price to $12.58 as investors welcomed QBE’s optimistic outlook for premium income and higher returns on its investment portfolio.

QBE said premium rates in its Australia-Pacific business rose an average of 9.1 percent.

QBE said premium rates in its Australia-Pacific business rose an average of 9.1 percent.Recognition:Bloomberg

As markets debate whether inflation may have peaked in the United States, Horton said the rate at which insurance premiums have risen may be slowing, including at QBE’s Australian business, where premiums have risen in the last half increased by 9.1.

But he said a slowdown in premium increases would depend on inflationary pressures easing over time, noting that alongside a rise in catastrophe claims, insurers are already dealing with increased pressures in the supply of construction materials and auto parts.

“Right now it doesn’t look like inflation will go away anytime soon, it might ease off a bit. Hopefully it’s peaked and starting to drop a bit,” Horton said. “I expect the rate of [premium] Rate change to go down a bit,” he said

According to QBE, gross written premiums increased 18 percent to $11.6 billion, led by 24 percent in the US business. During the half year, QBE’s earnings were impacted by a negative return of -$840 million on its investment portfolio, a recovery program in Australia and a $75 million provision for Ukraine conflict exposure.


Amid a global trend of rising insurance costs, QBE said its premium rates rose 8.1 percent globally and 9.1 percent in Australia, where catastrophe costs have skyrocketed due to ferocious weather, including this year’s catastrophic floods.

Atlas Funds Management Chief Investment Officer Hugh Dive said that despite poor returns from QBE’s investment portfolio, the company’s underlying insurance business performed better than expected, with solid results in the US, Australia Pacific and its international division , which includes Europe and parts of Asia. QBE (ASX:QBE) warns of inflation driving up insurance premiums

Brian Lowry

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