The Australian insurance market has stabilised and is entering a softening phase following years of significant premium rises, brokerage Edgewise says in a second-quarter update. 

“Policyholders with favourable claims performance should see premium reductions and an increase in insurer capacity and risk appetite,” it says. 

“This shift is attributed to stabilising inflation, insurer profitability and increased market competition, offering more favourable conditions for policyholders.” 

Insurers are likely to focus on risk management, technology and reinsurance strategies to maintain profitability, while affordability and accessibility are key issues, especially in regions with high exposure to natural disasters, the brokerage says. 

Areas that remain in the spotlight include worker-to-worker claims and challenges facing the recreation and live events sector. 

“There has been a significant increase [in] contract and labour hire workers who are injured during work and are paid out under workers’ compensation and the authority then seeks to recover the costs under an insured’s liability policy,” the report says. 

Sexual abuse cases show no signs of abating, with large awards and settlements involving a new wave of defendants.

Psychological injury claims that have been increasing in the workers’ compensation sector are starting to flow through to liability claims, where primary and secondary psychological injuries are increasing damage awards, Edgewise says.

In property, growing insurer appetite, the entry of new players and the involvement of local underwriting agencies are creating a positive trend. The report notes more capacity for high-risk industries, including those with expanded polystyrene panels, and a broadening of natural catastrophe coverage such as flood. It points to “0%-20% rate reduction on low-catastrophe, well-managed risks”. 

 In the general liability market, rates are stabilising after years of hardening. 

“Not only has the combination of new insurance companies entering the market intensified competition, we have also seen long-standing insurers shift their strategies and appetites regarding industry segments, policy lines and capacity for ‘higher hazard’ business.” 

Trends include new entrants and increased capacity from Lloyd’s, broader coverage and decreased deductibles, easing of underwriting restrictions and pricing that is flat to down 15%. 

Professional indemnity rates have fallen to levels not seen since 2016, but challenges include increased claims costs and frequency, while fintech businesses in higher-risk sectors face limited insurer interest. 

In commercial motor, inflation pressures have driven rates increases for the third year in a row, with greater increases for light motor. 

Telematics tools offering insights into driver behaviour are increasingly adopted and insurers are developing policies to address unique electric vehicle risks such as battery replacement. 

Rate moves are ranging from flat to 15% higher, depending on claims. 

The Edgewise market update can be seen here.