The world's biggest insurance broker, Marsh, sees a positive general outlook for insurance buyers in Australia as the industry moves into the second half of 2024.
In a report titled “Mid-Year InsuranceMarket Update 2024—Australia”, Mr Scott Eccleston, Marsh’s head of Global Placement, Pacific, says that across most insurance classes, insurers’ premium pools have grown and rates have stabilised. Combined with improving loss ratios and higher investment returns from high interest rates, these factors have led to significant improvement in financial results for insurers. This has encouraged a return of market competition from existing insurers as well as the introduction of some new entrants, which has been a welcomed development for insurance buyers.
Reinsurer treaty renewals earlier in the year experienced far more favourable conditions compared to the previous year, although natural catastrophe remains an ongoing challenge, particularly for those with New Zealand or US critical catastrophe exposures.
Mr Eccleston also said, “In the Australian liability insurance market, insurers have generally displayed broad appetite and a willingness to compete for new business, with the exception of those with US exposure. In these cases, some insurers have reduced capacity and/or adjusted pricing accordingly to limit their own exposure. Per- and polyfluoroalkyl substances (PFAS) exposure has continued to attract insurer scrutiny, particularly in the general liability and environmental impairment liability markets.
The financial and professional lines insurance market conditions continued to soften in the first half of 2024 and saw accelerated rate reductions compared to last year.
He says that Marsh’s Fast Track placement facility has provided its clients with exclusive access to an additional 7.5% quota share capacity (increased from 5% last year) across most insurance classes, generally at a discounted price. The facility has had an immediate positive impact on increasing market competition and creating consistency on pricing for complex placements
He added, “Overall, the first half of 2024 saw a significant improvement in market competition and the return of insurer choice for buyers, which had not been generally seen since 2017. Barring catastrophic losses from the North American hurricane season or other unforeseen events, continued improvement is likely in the purchasing environment for insurance buyers.”