Key Points• Our proprietary Online Home Insurance Pricing analysis has identifiednew business pricing for Home risks of +11.3% in the Dec ‘23 qtr vs pcp.
• Our proprietary Commercial pricing data shows average premium perpolicy rises of +12.6% for SMEs for Dec ‘23 qtr vs pcp.
• CTP pricing has begun to increase (+5.0% in Dec ’23 qtr), with SUN'sbook mix (+2.1%) repricing less than IAG (+2.9%).Event
• Our proprietary analysis has identified new business pricing for Homerisks of +11.3% in the Dec ‘23 qtr, while the avg premium rate rise forSMEs were +12.6%.
We expect each of the trends to hold for the next 12months.
Impact
• Home price rises +11.3% in Dec ‘23 qtr vs pcp (new business): Wecomplete a proprietary online price scraping analysis for Home insurance,with over a thousand price points by state and brand, weighted to reflecteach business.
This is a strong indicator of new business pricing trends.⇒ SUN’s repricing for new business was ~8.7ppt lower than IAG’s onaverage (IAG: +15.5%, SUN +6.8%).⇒ Australian Home: ~21%/~23% of IAG/SUN’s Group GWP respectively.• SME price rises +12.6% in Dec ‘23 qtr vs
pcp:
Our analysis ofCommercial pricing data for the SME customer segment, constructedwith proprietary and public data, shows average premium rates increased+12.6% in the Dec ’23 qtr vs pcp (+12.0% in Sep ’23).⇒ Australian Commercial lines: ~26%/~20% of IAG/SUN’s Group GWP.• CTP price increased +5.0% in Dec ‘23 vs pcp: Our analysis of CTP pricingdata shows +5.0% average premium rate improvements in the Dec ‘23qtr vs pcp.
Price increases for IAG's brands in NSW, vs declines for SUN'sbrands in ACT and SA, were the main contributors behind SUN’s loweraverage repricing (+2.1% vs +2.9% for IAG).⇒ CTP: ~5%/~9% of IAG/SUN’s Group GWP.
• Lead indicators: Our analysis shows the premium rate cycle (premiumswritten) is a strong lead indicator for the investment case of insurancebrokers, while margin expansion (as premiums are earned) is a better leadindicator for PE multiple expansion of insurers.
Outlook
• With customer retention remaining at all-time highs across mostproducts, repricing trends should continue to be positive for insurers. Wemaintain our positive outlook for the sector.
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