The insurance market is showing promising signs of growth in the construction sector, with a heightened willingness to take on associated risks. The key reasons for this stem from increased appetite from global insurers, along with more capacity from London that is flowing into local agencies. In the realm of large property risks, insurers are vying for market dominance in the arena of high-quality assets such as non-catastrophe exposed locations and well-constructed properties. However, subpar risks with substandard construction or inadequate risk management remain a difficult sell and are subject to increased rates. Meanwhile, the entrance of new players in the motor insurance segment is spurring tension and leading to more competitive coverage options for clients.

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Casualty insurers remain deeply concerned about the persistent impact of long-term social inflation on the cost of liability claims. This phenomenon, which has been affecting the industry for many years, is primarily driven by a surge in litigation and rising court awards for pain and suffering settlements. Although this is not a new trend, the true impact is only now becoming apparent as liability claims can take three years or more to reach resolution. Insurers continue to face significant challenges in meeting the casualty insurance needs of businesses that engage in any activities involving children. We are observing 5%-15% rate increases for renewals without a history of claims. Having said this, Honan works proactively with our clients to ensure strong risk control measures and claims management processes are in place to help minimise the frequency and cost of claims, driving better renewal outcomes.

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Honan has observed the impact of natural catastrophes globally and the restrictions from the 1:1 treaty reinsurance renewal spill into the property insurance space for sporting associations. Insurers are restricting cover for floods to clubs that are located near a river or watercourse. This has a direct impact on many sporting associations, as their zoning and clubhouse locations are often situated in low-lying areas or where residential construction is not permitted. As a result, many sporting organisations are required to self-fund increasing amounts of risk exposure for future major catastrophes. To support grassroots community sporting groups into the future, it will be crucial for state and local governments to take actions such as implementing buy-back schemes, improving town planning and zoning, and updating building codes.