THE first ABS industry statistics released since January’s natural disasters show the floods in Queensland and other areas of the country have had a catastrophic impact on the national insurance sector.
The ABS’ Business Indicators for the March quarter indicate a 48.1 per cent drop (seasonally adjusted estimate) in gross operating profits in the financial and insurance services category.
The December quarter saw insurers collectively gross $2 billion in profits, with the figure now halved to just more than $1 billion.
The results are not surprising, given figures from the Insurance Council of Australia indicate more than $4 billion has been paid out following the December-January period. With 52,683 claims lodged, $2.6 billion of this was a result of the Queensland floods alone.
The statistics come shortly after the Insurance Council released a statement urging for a ‘multi-faceted approach to tackle disasters’.
According to CEO Rob Whelan, 42 per cent of respondents to its industry survey didn’t believe insurers should pay claims where households had not taken out flood cover.
37 per cent believed insurers should pay river flood claims even when the cover hadn’t been purchased, while 21 per cent were undecided.
“More than 1600 people were surveyed by Roy Morgan Research earlier this year. Results show people believe local, state and federal Governments have a major role to play in protecting against floods,” says Whelan.
“The idea of compulsory flood cover for all households was not supported by the vast majority of people surveyed.
“Australians understand there is no simple solution to the flood insurance debate, and we need to develop a national approach to better deal with the challenges presented by floods.
“Insurers have moved to make necessary changes on issues such as a standard definition for flood; Governments must also make changes on issues they are responsible for such as land use, flood mitigation and building standards.”
Other findings (all in seasonally adjusted terms) from the ABS’ Business Indicators for the March quarter include:
(Note ‘sales’ includes ‘sales and services’)
- Total industry gross operating profits (GOP) fell 2.0% to $110 billion
- Total industry inventories (assets) rose 0.4% to $146.5b.
- Mining GOP fell 6.6% to around $21b and sales fell 6.0% to $50b.
- Manufacturing was strong, with a 7.5% rise in GOP to $14b from a flat $90b in sales.
- Electricity, gas, water and waste services fell 7.0% in GOP to $2.2b from just less than $9b in sales.
- Construction GOP fell 0.3% to $11.5b from just less than $60b in sales.
- Wholesale trade also performed well, with GOP increasing by 11.6% to $7.4b from around $99b in sales.
- Retail trade GOP rose 3.8% to $8.8b from $80b in sales.
- Accommodation and food services GOP fell 0.9% to $4.5b from $17b in sales.
- Transport, postal and warehousing GOP rose 1.1% to $5.5b from $25.6b in sales.
- Information media and telecommunications GOP fell 0.6% to $4.7b from $17.3 in sales.
- Rental, hiring and real estate services GOP fell 2.3% to $3.6b from $15.6b in sales.
- Professional, scientific and technical services GOP fell 2.0% to $14b from $38.5b in sales.
- Administrative and support services GOP fell 22.9% to less than $1b from $16.5b in sales.
- Wages for education and training fell 1.3% to $3.5b.
- Health care and social assistance wages and salaries rose 3.5% to $8.4b.
- Arts and recreation services GOP rose 28.6% to $950m from $5.7b
- Other services GOP rose 4.6% to $3.5b from $10.5b in sales.
Get our daily business news
Sign up to our free email news updates.