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Brokers and insurers agree – the hard market is coming

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Despite a relatively uneventful June 30 renewals period, major brokers and insurers remain convinced the market will harden.

Speaking in a Vero broker webcast, Steadfast Executive Chairman Robert Kelly describes June 30 as “the start” of the hardening market.

“I think we’re in for a fairly interesting ride over the next 12 months,” he says. “I think March to June next year will be when true broking will come to its fore and the hard market will be like a hammer hitting us on the head.”

Aon Australia’s Director of Broking Operations Steve Lardner agrees, saying the current market is “transitional”. He says June 30 saw more price increases in corporate than SME risks.

Vero EGM Intermediated Distribution Andrew Mair denies in the webcast that talk of a hardening market has not been over-hyped. “It’s still a bit mixed, but the trends are that the market is starting to firm.”

Mr Lardner says the current market is “three-speed”, with large price increases for catastrophe-exposed businesses, stable to small rises for businesses with “normal” risks, and insurers targeting new business opportunities with rate reductions.

The impact of reinsurance rates on the hardening market was debated, but Mr Kelly says the longevity of the hardening market will be determined by the level of capital invested in the industry rather than catastrophes or reinsurance rates. 

The webcast, which was moderated by insuranceNEWS.com.au Publisher Terry McMullan, can be viewed at www.vero.com.au.