Ben Rolfe
Ben Rolfe

Chief Broking Officer, Aon Australia

Snapshot

  • After four years of insurer remediation, market conditions are showing improvement
  • Pricing stabilisation is noted over recent months, driven by new entrants and growth expectation
  • Premium rate movement has also stabilised in areas of well-managed risks, however cyber, casualty, professional indemnity and complex property remain challenged
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As we come to the end of the fourth year of insurer remediation for some product lines in Australia, market conditions are starting to improve, albeit in pockets.

A significant shift to stabilisation of pricing in the US and UK in recent months, driven by new entrants and growth expectation, follows a sense that portfolios have been largely corrected. Premium rate movement in areas of well-managed risks, and risks with a low natural catastrophe footprint is starting to stabilise. However, cyber, elements of casualty, professional indemnity and complex property, remain significantly challenged.

Coverage is still being heavily scrutinised, and several restrictions are being imposed across the board – infectious disease, silent cyber exclusions, and limitations for contingent business interruption are being mandated by the majority with little or no flexibility, often driven by reinsurance requirements.

Segmentation in the market can be seen including emerging internal disconnects as insurers continue to be challenged by new underwriting practices; mounting growth expectations and the need to reduce volatility; and the ongoing failure to address profitability despite improving conditions.

Claims inflation, increased frequency of natural catastrophe events, and regulatory pressures are also contributing to the challenging and unpredictable market conditions. Buyers are re-focused on the value, structure and overall cost of their insurance programs and are faced with decisions around how to manage an ever-expanding and complex risk transfer need.

Download Aon’s Australian Insurance Market Insights 2021 for further expert perspectives, including tips on making better decisions amongst uncertainty.

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