Major bank dumps LMI agreement

by Julia Corderoy19 Feb 2015
Leading LMI provider, Genworth Mortgage Insurance is set to suffer a 14% decline in gross written premiums after a major bank terminated its agreement with the insurer.

Westpac has given Genworth 90 days written notice that they are terminating the agreement for the provision of LMI with the insurer. 

This came after the major bank said they have completed a strategic review of all their LMI arrangements for all new residential mortgage loans with an LVR of greater than 90%.  

The LMI business underwritten under this contract represented 9.5% of Genworth’s new insurance written in 2014. It also accounted for 14% of Genworth’s gross written premiums in 2014, which totalled $634.2 million. 

The full effect of this termination is more likely to be felt in the 2016 year and beyond, the insurer advised.

Westpac has not indicated if they will insure the loans with LVRs over 90%, take the additional risk itself or switch to rival insurer, QBE.


  • by Coast Broker 19/02/2015 10:19:22 AM

    An interesting move from Westpac. So are they looking at reducing the max LVR on their products? Also will this effect St George with Westpac owning them?

  • by Vic Regional Broker 19/02/2015 3:40:24 PM

    Hard to see them not insuring over 90% or even 80% if they intend to securitise some of the loans that fall into that category.

    They may even use a new to Australia insurer which would be great for competition in that market segment.

    Really the LMI Insurers have had a duopoly for too long !!!

  • by Michael Kent 20/02/2015 9:04:49 AM

    I wouldn't jump to conclusions yet. Surely they (Westpac) would lose a truck load of business if they capped loans at 80 even 90%.

    I read this morning they are dumping both Genworth AND QBE and have an exclusive deal with an insurer in Bermuda???

    Who knows, it could mean they can go to 99%, lets hope!