Backgroundtothegeneralinsuranceindustry.pdfVIP

2 The general insurance industry in Australia 2.1 This chapter provides first a description of the general insurance industry in Australia. It then details the complex regulatory framework within which the industry operates. Background to the general insurance industry 2.2 Australia has a large, profitable and long-established general insurance market. Statistics from 2011 show that the private sector insurance industry generates gross premiums of $34.9 billion per annum and has total assets of $113.9 billion.1 The industry employs approximately 60 000 people and on average pays out $95 million per working day in claims costs.2 2.3 In 2011, the insurance industry in Australia earned $42.1 billion in revenue with $5.6 billion constituting profit. Suncorp, Insurance Australia Group (IAG), QBE Insurance Group Ltd and Allianz Australia Ltd are the main players in this market. The industry is characterised by high revenue volatility and high levels of competition.3 1 Australian Prudential Regulation Authority, ‘Statistics: Quarterly General Insurance Performance, September 2011’, pp. 9–10 .au/GI/Pages/quarterly- general-insurance-statistics.aspx viewed 20 December 2011. 2 Mr Robert Whelan, Chief Executive Officer, Insurance Council of Australia (ICA), Committee Hansard, Sydney, 14 October 2011, p. 38. 3 IBISWorld, ’IBISWorld Industry Report K7422: General Insurance in Australia’, May 2011, p. 3, .au/industry/default.aspx?indid=526 viewed 9 January 2012. 14 2.4 The Global Financial Crisis greatly reduced the profitability of the insurance industry. A series of consecutive severe disaster events during 2010–2011, occurring over several regions, further exacerbated this problem.4 There were floods and cyclones in Que