Catastrophe-exposed property premiums in Australia are rising 10-20% while general liability rates are also increasing strongly in some parts of the market, Willis Towers Watson’s July update says.

In property, premiums for loss-affected or undesirable risks are also up at least 15%, while moves for more benign risks range from flat to 10%.

“Overall, market capacity is contracting while premium rates are increasing,” the report says. “High exposed accounts are needing larger deductibles and a sound risk management strategy to attract capacity.”

With a hardening market comes tougher negotiation. Willis Towers Watson says Australian insurers are putting underwriting submissions under increased scrutiny and seeking more granular data than in previous years.

Overall submission volumes have increased around two to three times prior years due to the premium and capacity moves, further straining insurers' resources and creating a congested market.

The report says insurers are looking to prevent over-exposure to any one risk and there is an increasing use of facultative reinsurance.

Capacity for desirable risks or those not affected by losses remains available, and while the market is competitive, incumbent insurers are unlikely to provide premium discounts. This is leading to a “two-paced” market.

In general liability, primary rates are flat to up 10%, while stronger gains are reported for additional layers of risk.

“After years of depressed rates on excess liability, minimum premium levels have increased with finely priced layers seeing increases of up to 25%,” the report says.

Insurers have become more considered in deploying liability capacity, especially in cases where they have in the past been willing to take on higher levels of risk.

“Insurers look to have capped their capacity at $50 million and will rarely reconsider, even if there is an opportunity for ventilation on the program,” the report says.