Cheaper car insurance not so good for profits

Insurance companies are back-tracking on previous promises that insurance premiums would hold firm, with evidence of premium discounting by many insurers in segments such as third party motor vehicle insurance. AAMI, a brand owned by Promina, is also discounting home and motor cover in Victoria. Allianz is discounting in the Queensland market. The lower premiums may lead to lower than expected profits for insurance companies. Australian Prudential Regulation Authority data for the September 2004 quarter shows adverse trends, with higher claims ratios and a blow out in the ratio of payouts and costs to revenue, which increased to 91 per cent from 84 per cent a year ago.

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