Australia rate increases slow to 1% in Q3
The latest Marsh commercial price monitor shows rates in the Australian market crept up 1% in the third quarter, below the 3% rise recorded globally and weaker than the preceding quarter’s 2% increase.
Australia accounts for 80% or more of Pacific business tracked by the Marsh Global Insurance Market Index and the pace of rate increases has been gradually weakening since a record 35% rise in the fourth quarter of 2020.
Marsh Deputy Head of Global Placement Pacific Scott Eccleston says conditions for insureds are improving after many quarters of double-digit hikes.
“I think we’re heading into 2024 with optimism… we’re probably at the end of the phase of the hardening [cycle],” he told insuranceNEWS.com.au.
“There’s been introduction of new capacity across most classes of insurance and new capacity leads to more competition and better pricing for buyers. I think it’s a pleasing trend for buyers that their cost is coming down.”
Financial and professional lines pricing decreased 5% in the third quarter after contracting 8% in the prior April-June period. Marsh says directors’ and officers’ rates continued to fall, with many clients seeing declines of 15% or more.
Property rates moderated in the third quarter, rising 2% compared with 5% in the preceding period and there were some positive signs as competition returned with the introduction of capacity.
However, loss-impacted and catastrophe-exposed risks are still seeing the highest increases, says Marsh.
“Underwriters remained cautious, making it essential at renewals that declared values be supported by formal valuations and/or adequate inflation loadings.”
Marsh says in New Zealand the emergence of flood risk, primarily during the first quarter, has led to greater scrutiny by underwriters of coverage, pricing, and insurers’ own loss modelling.
In casualty Australia pricing rose 5% after accelerating 7% in the second quarter. Marsh says new capacity in the market fostered increased competition.