Hard times in the insurance business Brokers say the June renewals have resulted in insurers playing even tougher when it comes to non-vanilla risks By Bernice Han
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sk brokers how the recent June renewals went and the responses are unanimous: it’s a brutally painful market out there right now. Not only have prices hardened substantially, building on the patchy recovery that began 18 months ago, but insurers are hanging tough on terms and in many instances refuse to even consider the business brokers have brought to the table. Renewals for extremely troubled lines like professional indemnity (PI) for construction clients are easily seeing premium rises in excess of 100%. And more often than not, the new policy comes with higher excesses, tighter terms and additional exclusions. Greg Evans, a private building certifier in north Sydney, knows exactly what brokers are saying. The premium for his PI policy increased to $19,000 last year from $5000 three years before that. The fact that he has a clean claims history meant nothing. He was recently offered just a 31-day extension for his PI policy, which was up for renewal in July. Attempts to secure cover from another underwriter came up empty. “I’m an A2 unrestricted certifier,” he tells Insurance News. “I have no claims against me. I’ve been operating
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since 2010 and even I can’t get insurance.” The extension offer is a “stay of execution at best,” he says. “It’s probably the best way to describe it.” Brokers Insurance News spoke to for this article would say that what Mr Evans is going through just about sums up the overall state of the liability market, particularly in loss-making lines like professional indemnity. They say that right now insurers are keen to reduce their exposures and shore up margins. It isn’t just a simple case of a long overdue price correction in the Australian market. Many other factors have come into play simultaneously to steer the market in the direction it’s taking today. The huge losses from natural disasters locally and globally in the past few years, along with worsening claims pressure in PI and other financial lines, are forcing insurers to take an across-the-board hardline approach. And where the investment market shored up insurers’ reserves in the good times, it has been under-performing for several years. Investors share that pain, but their focus is on improved profitability from their investments – which includes insurers.