Softening conditions are continuing across most product lines amid a surplus of global capital, Bellrock Advisory says in a market overview. 

The firm says the market cycle “clock” remains at 3 o’clock – the point at which insurers chase share. A hard market is at the top of the clock face and soft conditions at the bottom. 

In property, new managing general agents and underwriting agencies have increased competition locally, while insurer borrowing costs have improved with reduced interest rates, although this has also cut investment returns.

Bellrock expects continued softening, depending on US hurricane season repercussions and assuming global natural catastrophe losses track in line with expected levels.

In commercial general liability, premium reductions of about 5%-10% are being seen.  

“Again, increased competition locally, owing to new market entrants, has improved capacity and flexibility,” the report says.

“This has resulted in the local market generally offering ambitious pricing when compared to Lloyd’s of London, including a reduced excess and broader coverage terms.”

Coverage for per- and polyfluoroalkyl substances (PFAS) and sexual abuse remains excluded as standard.

In motor, rate increases of 5%-10% are common for small vehicle or small fleet policies, Bellrock says, with longer repair times driven by complex technology such as advanced driver assistance systems or electric vehicle parts, and labour requirements.

Heavy motor and large fleet policyholders are benefiting from pricing stability, with risk management incentives for using systems such as GPS tracking and telematics.

In directors’ and officers’ liability, Australia is seeing strong capacity and competitive pricing, with well-managed and perceived low-risk industries receiving 15%-40% reductions from local and Lloyd’s markets. 

Bellrock cautions the D&O softening shows signs of slowing due to regulatory pressures, such as from Privacy Act reforms, environmental, social and governance reporting, climate litigation and an increase in Australian Taxation Office director penalty notices.

In professional indemnity, premium drops of 5%-10% are available for financial services licensees with strong governance and compliance controls.

The strata market remains stable, but insurers are examining each plan’s underlying risk and claims history. Those with a poor history, structural defects or maintenance issues are likely to experience continued difficulty obtaining quotes, Bellrock says. 

The report is available here.