Coverages have broadened and tough-to-place risks such as property have had exclusions lifted as soft commercial pricing persists, according to an Aon review of the Australian market.

The broker’s second-quarter Global Insurance Market Insights Report says abundant capacity is “driving intense competition and rate relief” across most major lines.

“Underwriting has been flexible and insurers are willing to revisit coverage restrictions that were applied during the previous hard market phase.

“For example, property insurers have broadened writeback coverage related to cyber exclusions and have been willing to offer other enhancements to restore coverages previously restricted in the hard market, including business interruption extensions for infectious disease outbreaks.”

Australian price drops ranged from minus 1% to minus 10% in the June quarter. Increased limits and reduced deductibles were among key trends for the period.

“Property and casualty conditions have continued to soften, driven by sound underwriting profit and surplus capital,” Aon said.

“Deductible reductions have been available for well-managed risks, particularly in short-tail classes such as property.”

In property, heightened competition and abundant capacity produced double-digit price reductions.

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“Even some challenging risks have attracted oversubscription, supporting favourable renewal outcomes. Competition has been especially fierce for large corporate risks as insurers seek to meet their premium budget targets.

“Insurer growth ambitions and focus on top-line revenue growth have expanded buyer choice and enabled the removal of some restrictive terms.”

Cyber and directors and officers pricing trends also favoured buyers.

Aon says cyber underwriting has been relatively flexible, but insurers remain cautious of systemic risks, catastrophes, evolving criminal tactics, supply chain vulnerabilities and the increased use of artificial intelligence.

AI has also emerged as a concern for D&O underwriters. While clients continued to benefit from favourable conditions, downward pressure on pricing moderated in the quarter.

“Insurers have sharpened their focus on emerging claims drivers, including AI and cyber governance,” Aon said.

The report says motor is an outlier as insurers continue to face higher claims costs, driven by longer repair times, labour shortages and supply chain delays.

“Typically, well-performing fleets experienced inflation-linked pricing adjustments in Q2, while placements with higher-frequency claims experience have received more substantive increases.”

Globally, commercial insurance buyers continued to benefit from favourable conditions, but insurers remain wary of geopolitical volatility and have responded accordingly, Aon says.

“Geopolitical tensions, particularly in the Middle East, continued to impact underwriting, pricing and terms for marine, aviation, cyber, political violence, trade credit, property and financial lines.

“The current environment gives buyers a window of opportunity to secure durable program improvements ahead of a potential turn in the cycle.”