Speaking to The Insurer TV as part of its Leading Voices series, Kelly noted the increased concentration of natural catastrophe events such as bushfires and flooding had made conditions more challenging for insurers covering such risks in Australia.

“The interesting part about floods is that, whilst they do a lot of damage, not a huge amount of people take flood coverage in the Australian market,” Kelly explained.

As an example, Kelly referred to the recent floods which impacted parts of eastern Australia between 23 February and 8 March. Catastrophe modelling agency Perils has estimated the insured losses from this event at A$3.991bn ($2.945bn).

Kelly also noted the bushfires and floods that occurred around the same time, making conditions particularly tough for insurers covering such risks, noting they are “sucking capital out of the Australian market”.

“It’s impactful… it’s certainly impactful on the catastrophe reinsurers, but there seems to be enough capital around to sustain it, and it’s a strong and not volatile market in terms of people staying insured,” Kelly said.

He continued: “”We’ve had no pestilence and I think that’s been pretty good. We’ve had just about every other natural occurrence that could drag capital out of the insurance industry.”

Fitch Ratings has also said the recent flooding and severe storms in Australia is not a capital event for insurers, as they are protected by robust earnings and capital headroom.

Keeping London close

During a visit to London for the inauguration of a new office, The Insurer TV spoke to Kelly about the state of the Australian market and the talent drought in the country.

Kelly also referred to the importance and relevance of the close relationship between the London and Australian markets, which has enabled the transformation of the Australian market through the use of data.

This tallies up with Steadfast’s wider ambitions to “make more fluid the transmission of data” as the market quickly changes through digitalisation.

One of the key aspects of the increasing relevance of data for the insurance industry is the decreased reliance on in-person contact for the development of business relationships across the market.

While the industry formerly relied heavily on face-to-face contact, distribution of data has enabled new ways of integrating personal relationships.

“Is data king? It probably is, so the analytical analysis of what you’ve got and how you deploy that into the market, how you price it and make money for everybody, that’s the challenge,” Kelly noted.

He also noted that London and Australia have been benefitting from the same fluctuations in market cycle, contrary to what used to be the case.

“It’s a really important aspect of distribution to have a foothold in the London market because in days gone by, it used to be a swings and roundabouts market. When London was high, Australia would be low, and when Australia was high, London would be low. I’m pleased to say that’s been equalled out over the last few years,” he noted.

Having a relationship with the London market also allows for Steadfast to diversify its offering, gaining access to the London market which has a diverse range of cover unavailable in Australia.

Steadfast Re’s recently launched London office will facilitate the group’s operations in the London market, where its reinsurance division is particularly successful, Kelly noted.