Several factors contribute to this upward trend in premiums:
- Increase in Bodily Injury Claims: The average size of finalised bodily injury claims has grown by 5.5% annually since 2013, with work injury claims doubling in size compared to other bodily injury claims.
- Rise in Psychological Claims: There has been a notable increase in psychological injury claims, adding to the overall inflation in claims costs due to social, legal, and medical factors.
- Escalating Legal Expenses: The increasingly litigious environment has led to higher legal costs, further driving up insurance premiums.
In response to these rising costs, many businesses are opting for policies with higher deductibles, effectively assuming more risk to manage premium expenses. This trend reflects the challenges businesses face in balancing the need for adequate coverage with the financial realities of increased insurance costs.
The APRA report underscores the importance of ongoing data analysis and industry collaboration to develop strategies that address the root causes of rising premiums. By understanding the factors driving these increases, stakeholders can work towards solutions that ensure the sustainability of the public liability insurance market while providing businesses with the protection they need.
