Insurance Updates

By Travis Wendt – National Head of Corporate Insurance & Risk Solutions



The Property & Casualty market remains challenging overall, but we are starting to see a shift towards the end of the June quarter (Q4), especially around pricing and increased levels of competition. Whilst distressed risks (higher risk occupancies, catastrophe exposed, or those with a poor claims history) are seeing rate increases exceeding 25%, reduction in coverage (limits and sub-limits), and limited capacity.  We saw pricing increases for ‘good risks’ during the March quarter (Q3) of between 10% and 15%, however, this reduced to 5% and 7.5% in the June quarter (Q4).  In some instances, when further competition was introduced, clients were able to obtain a rollover of rating on expiring terms and conditions.  We expect this trend to continue for well-managed risks.

The Casualty segment continues to see further increases in rates (starting at +7.5%) as profitability remains poor and insurers are more conservative in the capacity they deploy.  This is coupled with the need for greater levels of Management approval.  Overall, limits and capacity remained stable during the last quarter, although bushfire, molestation, and sexual abuse cover, and construction risks with worker-to-worker exposures seeing pricing increases, again due to a contraction, re-deployment of market capacity, and continued remediation of portfolios.

Overseas markets such as Singapore continue to play a crucial role when marketing and placing certain risks.  Over Q3 and Q4, our use of the Singapore insurance market has increased due to interest from insurers who are more open to quoting Australian risks to diversify their portfolios.





Insurers remain risk selective as they strive for a balanced and profitable portfolio.  We expect pricing increases to continue with insurers still looking to limit and, in some cases, exclude their sideways exposures, these include non-damage business interruption, prevention of access, and communicable disease for property risks, and worker-to-worker exposures in the liability segment.  For the larger Australian insurers that are based in Australia, June/July marks the anniversary of their treaty reinsurance, with any changes in underwriting appetite, pricing, and coverage to be better understood over the September quarter (Q1).



Aside from ‘good risks’ where competition is driving down the cost of insurance, pricing increases are likely to continue until there is more consistent profitability in the insurance market. Opportunities for clients to restructure certain insurance programs or introduce co-insurers may also improve pricing.  While Q1 is considered a benign period for natural catastrophes in Australia, insurers will be hesitant to accumulate too much risk to offset the impacts of non-modelled catastrophe events such as hail, storms, and water damage.



Discover more market updates from this edition of HoneIn.

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