The Australian commercial insurance market generally tilts in insureds’ favour, driven by plentiful capacity as insurers compete for business, Aon says in a first-quarter review.

The global broker describes conditions as soft, with price movements of minus 1% to 10%.

Concerns about impacts from the California wildfires have yet to materialise, Aon adds.

It says bushfire exposures are again topical, but the US disasters “while damaging, are unlikely to have pricing repercussions” for the Australian and New Zealand markets.  

Ex-Tropical Cyclone Alfred has also had a limited impact, because much of the loss will be ceded to the federal cyclone pool.

“Overall, most lines of business are seeing modest reductions, with the key exception of automobile, where rates have continued to increase in response to increased claims severity,” Aon says. “Competition continues to strengthen, although pockets of risk remain more challenging, such as US-exposed casualty and natural catastrophe-exposed property risks.”

The March-quarter trend bodes well for insureds as they approach mid-year, according to the broker.

“Heading into Q2, competition for non-complex and mid-market risks is accelerating and those insurers with a flexible approach are well positioned to take advantage of the rapidly changing market environment,” Australian head of product and platforms for commercial risk solutions Tracy Riddell said. 

Aon says in property, competition is leading to greater alignment of coverage across programs, although there are exceptions.

“While competition for preferred property risks continues to intensify, natural catastrophe risks may experience capacity constraints, in particular for northern Queensland.”

In cyber and directors’ and officers’, new entrants have added to capacity.

“Overall, coverages are stable … some clients are taking advantage of more favourable conditions to purchase broader coverages, particularly for directors’ and officers’ and cyber.”

See the report here.