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ness pack policies were rising by at least 5%, and up to 8% in some cases. In other lines, brokers have said industrial special risks premiums have risen as much as 25%, while management liability rates have climbed 20-25%. Rises in other liability classes have been moderate. Insurance House Group Managing Director and Insurance Brokers Network Australia Chairman Gary Gribbin points out the rises haven’t been across the board and it would be too soon to say “spotty” increases so far represent a hard market. “There are legacy issues in ratings structures that are being corrected, and some high-risk businesses are being treated to some steep increases,” he says. Insurers have looked for 6-7% increases on a “whole-of-account basis” he said. S&P Global Ratings analyst Craig Bennett says plentiful capacity and competition from offshore rivals continues to limit premium moves in the top end of the commercial market, with more signs of a turnaround in the small-to-medium segment. “From conversations we’ve had with insurers, they are becoming a lot more comfortable around putting some rate increases through and being able to maintain retention,” he tells Insurance News. Claims inflation has impacted the market in some lines, such as motor cover, while in liability increased claims activity in certain areas has contributed to rising awareness of the potential risks. “I think the market has turned,” Mr Bennett says. “We are not expecting big increases across the board, but we do expect rate to hold and further rate rises to come through at a general level.” 12

“We are expecting to see continued uncertainty and a more measured attitude towards risk in a number of sectors.”

Some segments are still “a bit underpriced”, with further material gains likely, while other segments are starting to reach return objectives, he says. The shift in gears has proved a challenge for younger brokers who have not experienced a time when prices are pointing in the wrong direction for clients and the market is more risk-averse, according to the observation of some veterans. “Based on what we have seen in the first part of the year, we are expecting to see continued uncertainty and a more measured attitude towards risk in a number of sectors,” Arthur J Gallagher Head of Corporate Broking Mark Oatway says in a report on the local situation. “The market continues to harden, which re-emphasises the critical role of a broker, especially for specialist or harder to place risk.” Regional issues are also coming into play to some extent after Cyclone Debbie powered across the Queensland coast at the end of March and moved south as a major rain-bearing depression, becoming one of Australia’s costliest natural catastrophes. insuranceNEWS

August/september 2017

“Anything above the 25th parallel south is being scrutinised from an insurance perspective and renewal terms are not being offered for some clients,” Arthur J Gallagher says. “For those where cover can be provided, premium increases across the board are expected.” General liability premiums are on the move, according to the report, although not to the same degree as the property market and with only marginal increases for well-managed, low-claim activity accounts. Despite the gains, the plentiful capacity that has weighed over premiums has not disappeared, and the environment remains competitive. It is yet to be seen if the pricing will further strengthen as market conditions change and insurers try to improve their financial performance. Typically, a turning from the soft to hard parts of the cycle would mean consecutive periods of market hardening, Mr Cohen says, while warning this is not always the case. “I would like to think that we would see this sustained and that we would not go backwards at the next renewals,” he says. *

Profile for Insurance News (the magazine)

AUG/SEP 2017 - Insurance News (the magazine)  

Do premium rises in the June renewals season indicate the market has turned the corner? The industry’s most popular print publication, Insur...

AUG/SEP 2017 - Insurance News (the magazine)  

Do premium rises in the June renewals season indicate the market has turned the corner? The industry’s most popular print publication, Insur...