Yet again, insurers have talked the talk but failed to walk the walk, with brokers reporting lower-than-expected rises at the mid-year commercial renewals.

“We haven’t seen it as hard as a lot of people had expected,” JLT Australia CEO Leo Demer says of the “reasonably quiet” renewals period.

“I’m quite surprised at the lack of increases because we all heard it was coming, insurers were doing badly and would have to increase premiums,” Austbrokers Premier Principal Scott Hastings says. “But they’re as hungry for premiums as ever, so it’s probably a better outcome for clients than we were expecting.”

But a distinction between renewal and new business rates has been observed, with brokers telling insuranceNEWS.com.au that new business has benefitted from premium cuts while renewals have been either flat or attracting single-digit rises.

Brokers also characterised the market position and rating behaviour of individual insurers differently.

“Vero is quite aggressive, QBE are actively trying to retain business and Allianz and CGU are chasing business,” Comsure CEO Steve Hamill says.

Mark O’Reilly, a director at Austbrokers Countrywide, describes Lumley as “relatively cheap”, with QBE and CGU trying to push rates up and Zurich showing some appetite in new areas.

Another broker, who declined to be named, told insuranceNEWS.com.au that QBE, Allianz and Zurich are “all competitive”.

While rate increases have typically been small, terms and conditions have been noted as tightening.

“We’re seeing considerable scrutiny on terms and conditions on classes that previously weren’t subject to such scrutiny,” Mr Hamill said.

He believes the disparity in rates between renewals and new business and the tightening of terms and conditions has resulted in a “little bit” of business changing hands between insurers.

But the bigger picture at this renewal period is a complicated one.

There has been a more selective approach to individual risks, with a lack of hardening in the reinsurance market, managing the aggregates and excess capacity all coming into play.

There were some anomalies to the general subdued rate rises, with all of the brokers insuranceNEWS.com.au spoke to singling out catastrophes zones as attracting more significant increases.

The North Queensland market, in particular, was characterised as “volatile” and even “a basket case”, with premium increases in the order of 30-50% the norm.

Cairns broker Joe Vella says commercial rates in his part of the world range from marginal increases to an inability to get cover at all, depending on the industry involved and exact location, with clients trying to manage the increases by maxing out their excesses.

He says high-rise properties and those on the Barrier Reef islands are proving particularly difficult to place.

Nevertheless, Mr Vella, MD of Joe Vella Insurance Brokers, says the renewals have been relatively quiet – compared to last year, anyway.

“It’s been probably a more stable June 30 period because of the inability to get alternate prices for our risks up here,” he said.

Aon Head of Broking Services and Chief Broking Officer Pacific Bob Mann says the underwriting approach to catastrophe zones has become driven by each insurer’s aggregates – or total potential exposure – for each region.

He says insurers have been “managing the aggregates” much more carefully than in recent years in order to manage reinsurance costs.

Comsure’s Mr Hamill agrees that underwriters now want more certainty and a greater understanding of their exposures to different geographical regions.

Increases of between 20% and 200% for clients who have a flood-affected postcode have been noted by Brisbane-based Scott Hastings – despite some of those businesses being outside the flood area.

“Most [insurers] are going by postcodes that flooded and most of them are rating by that,” he told insuranceNEWS.com.au. “People are being penalised…

“It’s not like you can get a client to change their postcode.”

One difference observed by several brokers insuranceNEWS.com.au spoke with was the emergence of a new style of underwriting.

JLT’s Leo Demer characterised it as “more civilised”, with underwriters more receptive to discussing risks and negotiating the premium with brokers – something he attributes to stronger relationships between underwriters and brokers.

Aon’s Bob Mann describes it as “micro-underwriting”, with more discipline being shown by underwriters who are approaching risks on a case-by-case basis.

He says “peer or committee underwriting”, with more scrutiny around underwriting decisions, is increasingly common, with insurers being selective and looking for risks that will perform well over the longer term.

But both Swiss Re’s latest Sigma report and Willis Re’s report on the mid-year reinsurance renewals get to the heart of the rating see-saw and the much-touted, rarely sighted market hardening: excess capacity.

Willis Re says that although some increases were seen at the mid-year reinsurance renewals, they were by no means across the board and did not represent a hardening reinsurance market.

As seen here in the primary market, Willis Re noted reinsurers taking a more selective, risk-by-risk approach to their pricing for insurers.

The Swiss Re report declares that because overall levels of capital and solvency in the global primary insurance market remain solid, premium growth will be “moderate” with the turn of the pricing cycle likely to be “gradual and limited to certain markets and lines of business”.

This certainly describes the situation locally this renewals season, and Mr Mann confirms that it is “excess capacity” that is holding back rates locally.

Simon Cook, CEO of IC Frith & Associates concurs: “Until some capacity dries up we’ll see more of the same.”

What that means, ultimately, is that barring a major US hurricane or a significant change in global economic conditions, June 30 next year will probably seem strangely familiar.