Commercial pricing is poised to moderate further after rates fell for the seventh straight quarter.

Marsh’s composite price index for the Pacific region – where Australia makes up at least 80% of renewals – declined 11% in the third quarter.  

“It’s continued what was seen all year … an excess of insurer capacity in the market, increased competition for all lines of business and really all industries as well,” the broker’s Pacific head of risk management Scott Eccleston told insuranceNEWS.com.au.

“Insurers’ results keep improving and there’s been a pretty benign claims history globally … the North American hurricane season is very benign … We started the year off with the Palisades fire in the US, but that didn’t change anything.”

He says insurers are keen to retain business and are chasing growth.

“Everyone’s defending their own patch and they’re very aggressive, which is creating more pleasant buying conditions for our clients,” Mr Eccleston said.

“I don’t see any change in the immediate future … I think there’s so much new capital that’s coming to the market, I don’t see there being overheating of the market.”

Pacific property rates slumped 14% in the third quarter; casualty dropped 7%; and financial and professional lines fell 10%.

In the property market, insurers are offering negotiable terms including higher limits, reduced deductibles and removal of mandatory endorsements.

Marsh says the largest rate reductions came in previously capacity-constrained, distressed sectors with historically high price rises such as food and beverage, mining and power, as well as catastrophe-exposed regions.

“If insurers are chasing growth, which they are … those natural catastrophe accounts or high hazards like unprotected [expanded polystyrene], waste recycling, some of those industries have been a bit of a challenge,” Mr Eccleston said.

“Because the rates over the hard market climbed so high, it’s now become attractive business, and the risk is generally improved …  if you’re in Far North Queensland, you’re still exposed to cyclones, but you might have put in some risk mitigation to make your risk better for insurers. And same for some of those high-hazard industries. They might have put in some sprinklers or they’ve put in some other risk controls, so the risk has improved.”

From the latest Insurance News magazine: See how the major insurers and broker groups fared last reporting season, and why some analysts expect tougher times ahead