Australian insurers have re-entered the market “with gusto” in recent months, adding to competitive pressures that have helped premium rates stabilise, broker Gallagher says.

Premium increases are typically in the single digits, but hard-to-place risks such as expanded polystyrene panels, mining and energy, and recycling-related businesses remain challenging. 

“The first half of 2024 has seen rates continuing to stabilise, with ... more options for insurance buyers,” Gallagher’s half-year Business Insurance Market Conditions and Risk Dynamics report says. “In the last six to 12 months, we have seen Australian insurers re-entering the insurance market with gusto ... this has consequently resulted in a more competitive environment with London, Singapore and other international markets active on Australian domiciled risks.”

Gallagher says Australian insurers are seeking a share of higher premiums as the market has hardened and is at the top of the pricing cycle.

The shift in market conditions has given insurance buyers renewed confidence around both coverage and pricing.

“Several years of premium price increases in a challenging insurance market have inevitably left businesses focused on price as a priority at renewal,” the report says. “However, as the market experiences a largely positive shift, there is now a greater emphasis on the quote options available, and a higher expectation for brokers to present competing quote terms to their clients, with long-term risk management strategies in mind.”

Gallagher sees no change in the next six to 12 months, predicting businesses will probably further benefit from premium rate stability and increased coverage options.

“Increased capacity across the insurance market is leading to more stable pricing across most insurance classes.

“There is an overarching theme revolving around presenting clients with more options to build their insurance program to suit their risk, whether that be the way the program is structured, or including access to alternative risk management solutions, such as captives and parametric insurance.”

In the directors’ and officers’ space, capacity continues to grow due to increased competition – a sharp turnaround from recent years when significant rate increases occurred as insurers pulled out because of soaring claims.

“The market is showing stronger signs of stability, with reduced premiums spurred by heightened competition from the London market,” the report says. “However, we are not yet operating in the competitive environment experienced five years ago in terms of pricing or coverage.

“Underwriters are reassessing premium adequacy and risk appetite while brokers test increased limit factors for excess layers funded by renewal premium savings.

“For insurance buyers, this positive shift in the market is leading to increased options at renewal.”

In property, Australian insurers have increased their offerings, helping to drive competition and ease premiums, with rates stabilising at about 5-7%.

However, inflation continues to put upward pressure on property reinstatement values, which is also affecting revaluation lead times as demand for accurate valuations becomes key.

Click here to access the report.

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