Originally Posted by
Independent Observer AUNZ
It is almost zero exposure on Tower's book - they only offer small enterprise commercial insurance; things like dairies, small workshops, man-in-a-van type operations.
There is an increased opportunity for other claims though, for things where accidents in the home are the cause.
I expect renewal rates will be down slightly, but not dramatically - its only 4 weeks at this stage. In the longer term a recession will mean less can afford insurance so their ability to compete with others for their share of the dwindling pie will be critical.
None of this changes their expense-base though - so it comes down to whether every dollar received in new business can cover the fixed cost base, even if claim costs are down.
Another unknown is where the reinsurance market is in all this... there could be major cost savings there if the market is extremely soft globally.