Australian business insurance companies are leaders in the Asia-Pacific for advanced risk management practices. This is driven by the Australias strong regulatory systems, according to a report by Standard & Poors (S&P).
Only two countries, Australia and Japan have strong enterprise risk management (ERM) scores, according to the S&P. Other countries in the Asia-Pacific, have improved over the past one and a half years, but they still lag behind more developed markets like Australia and Japan.
Australian insurance companies have embraced national and international risk management standards. Leading insurers have learned from the global financial crisis and made substantial investments in Enterprise Risk Management. Australian business insurers have adopted economic capital modelling, and other large Australian companies leverage their robust risk management frameworks.
The ERM advances of major European and US-based parents have also served their Australian units well, the report says. While the industry has not been without its risk management failures, the occurrence of significant risk events has tapered off in recent years.
This success comes despite Australian insurers facing their toughest-ever environment despite profits increasing 61% last financial year and gross written premium (GWP) rising 9.2%, according to KPMG.
New regulatory and capital requirements add an extra layer of complexity to the market.
In New Zealand, business insurance providers have managed their businesses to withstand catastrophe risk, but not all insurance companies survived the Christchurch earthquakes, according to the report.