Improved conditions for insurance buyers seen in the first half of this year are likely to continue, Marsh says in an Australian market update. 

Across all general insurance classes, improving loss ratios and higher investment returns have lifted insurers’ financial positions, driving aggressive growth targets and more intense competition from existing participants and new entrants.

“Barring catastrophic losses from the North American hurricane season or other unforeseen events, continued improvement in the purchasing environment is likely to persist in the Australian insurance market,” Pacific head of global placement Scott Eccleston said.

Despite the trend, renewal results vary and some lines such as health and benefits classes are experiencing upward pressure.

Premium rate changes in the first half included drops of 5%-15% for property, 2%-5% for liability, 10%-20% for directors’ and officers’, and 0%-15% for professional indemnity.

Cyber eased 5%-15%, construction 5%-15% and crime 0%-10%, while medical malpractice has ranged from 10% falls to 10% increases. Marsh’s workers’ compensation portfolio has recorded 2% drops to 2% rises. 

In property, a benign period for local natural catastrophes contributed to a decrease in claims activity, and attritional losses have reduced due to increased retentions and improved risk management. 

In liability, insurers remain disciplined on capacity for high-hazard industries or risks with significant exposure, such as bushfire, rail, mining, agricultural chemicals, pharmaceutical and sports, faith and community. 

“In the small to medium and mid-sized businesses space, it has been positive to see some market appetite return for risks with high claims frequency, which had been extremely limited over the past 12-24 months,” the report says.

Professional indemnity premium reductions have become more prevalent in industries with complex or high-risk profiles, while professions using artificial intelligence to provide services have been under heightened underwriting scrutiny.  

There is a focus on the type of AI tools used, and risk management controls and output verification processes to address any biased, false or other misinformation generated.  

Competitive conditions are expected to continue, with rate stabilisation likely to start taking effect in 12 to 18 months, Marsh says.

In cyber, despite favourable market conditions, the claims landscape remains under scrutiny, and there is an underwriting focus on company due diligence around the cybersecurity of third-party suppliers.