State of the Market
The uptake of W&I insurance on deals continues to grow globally. It has become an increasingly attractive proposition for corporates, public companies, real estate funds and PE clients. With new insurers entering into the Australasian region, this has driven a number of overall market trends in 2018, all being ‘client friendly’. For example:
- Pricing for W&I has become more cost effective than ever –plummeting rates for excess pricing (i.e. pricing for layers of insurance above the primary layer) has significant impacts on the costs of insurance, particularly on larger deals
- Primary rates remain low and steady – average premium rates in 2018 continued to be below 1% of the limit insured as larger programs are structured.
Average premium rates continue to fall and insurers continue to offer favourable policy coverage for clients. Additionally, tipping or lower retentions/deductibles were offered and purchased on half of Aon’s Australasia deals placed in 2018. Insurers are increasingly able to offer retentions that tip to nil, such that there is recovery from the first $ of loss. Clients are now electing more than ever to take up lower-than-before standard 1% retention, which is now a regular feature offered by most markets.