The National Insurance Brokers Association's (NIBA) six-monthly policy renewal survey confirms what the industry has been saying unofficially – the insurance cycle is turning. But despite the dire warnings from companies like CGU and Suncorp that the soft market is at an end, it appears the drive for market share is still winning over tougher underwriting.

The NIBA survey formalises what insuranceNEWS.com.au reported in June after speaking to a broad range of brokers – that strong competition for good business is keeping the expected rises at reasonable levels, and that good business is being rewarded with decreases.

It’s a different story in the personal lines market, with brokers reporting continuing rises in home and contents policies and private motor lines as consumers bear the cost of last year’s wild weather.

NIBA asked brokers to rate on a sliding scale the degree to which the market has turned the corner.

With one representing extreme discounting and 10 extremely increased premiums, more than 73% of brokers rated the commercial lines market between 4 and 7. This time last year they camped between two and four.

NIBA CEO Noel Pettersen says “rational market behaviour” is the cause.

“In the past we have experienced very sharp rises in premiums as the economic cycle has turned. We expect rises will continue to be introduced over the next couple of years at least, but it’s obvious the insurers are being cautious in their approach.”

Delving into the details, it’s clear this upward shift is anything but even.

In public liability lines, 40% of respondents noted rate increases between 1-30% – but 24% noted decreases.

Business interruption policies were on the up among 33% of respondents, but 51% said there’s been no discernable change. Increases in directors’ and officers’ lines have been slighter still.

Professional indemnity business remains highly competitive, with 19% of respondents saying they’re on the up, but an even higher figure – 40% – saying the discounting goes on.

In personal lines, 70% of respondents to the NIBA poll noted premium increases of up to 30% in policies such as home and contents. That’s a reflection of the big claims personal lines insurers picked up last year after such events as the Central Coast floods in NSW, hailstorms in Western Sydney and stormwater damage in Mackay in Queensland.

Mr Pettersen says while leading insurers have consistently said premiums would have to increase, intense competition is keeping them lower than they’d like.

This is not 2001. As long as the economy doesn’t go completely out the window as the US takes fright, increases are likely to stay slow and steady.

More sophisticated methods of data collection are enabling underwriters to more accurately rate separate classes of business and individual risks, Mr Pettersen says.

That also supports the contention of QBE Group CEO Frank O’Halloran, who told last year’s NIBA Convention the amount and range of information now available to underwriters makes pricing a much more precise business, and there’s less reason for across-the-board decisions.

There are plenty of war stories about insurers attempting to impose a price rise only to have the broker shop the business to a rival insurer, forcing the original insurer to match it, take a cut or walk away.

Top line growth is continuing to drive much of the market at the expense of bottom line profit – at least for some players.

Generally though, brokers say insurers are acting rationally. Where premiums were on the up, rises were “reasonable” in 43% of cases, the most common response.

It’s a welcome sign of a stable market. And where the irrational behaviour of some players the last time the market reached bottom led to disaster — remember HIH? –  this time around there’s the added security of intense regulatory scrutiny.

The competitive market will continue as long as there’s sufficient capital coming in to keep it buoyant. Unlike 2001/02, there’s unlikely to be a mass withdrawal of capital that forced premiums to rocket.

This time around – as long as the global economy stays relatively stable – Australia’s insurance market stands out as mature, with strong players and an effective regulatory regime. Right now they’re very positive points. Investors at least know their money’s as safe as it can ever be.