Gallagher says there’s some evidence of price increases levelling out but across the board insurers are assessing which areas of the market they want to participate in and overall there’s significantly less capacity than previously.

A third-quarter report puts the market still at the top of the hard phase of the insurance cycle, driven by factors including natural catastrophe losses, diminished investment returns, class action activity, COVID-19 implications and for some industries, environmental accountability pressures.

“We haven’t yet seen a resolution to the COVID-19 business interruption test cases, however the impact is already being felt as insurers tighten up policy wordings, not just in relation to the pandemic and how policies could be perceived to respond, but across the board for all of their policies and exclusions to ensure they’re not leaving themselves open to cover unintended exposures,” Gallagher says.

Property is particularly constrained as insurers respond to pressure on margins from claims losses, amplified reinsurance costs and poor investment returns, but the level of premium increases depends on factors such as location, use and construction type.

Challenging areas include natural catastrophe zone locations, food and beverage producers with a large footprint of expanded polystyrene, high fire load manufacturing accounts with inadequate fire protection, buildings with aluminium composite panel (ACP) cladding, timber-constructed hotels and pubs, recycling operations and timber mills.

“We are seeing multiple carriers becoming the norm on property placements, which is a stark contrast to four or five years ago, where a single market leader underwrote the account 100%,” Gallagher says.

Public liability cover is subject to premium increases regardless of claims activity or turnover gains, reflecting a more litigious environment and outcomes of legal cases.

Business attracting larger increases include those where there are risks related to bushfire exposure, sexual misconduct, amusement rides that lift and spin, trampolines, thermal coal and tailing dams.

Workers’ compensation insurers are increasingly seeking to reclaim costs by suing other insurers under lability policies, particularly in scenarios involving contractors or labour hire.

“Insurers are taking a more conservative approach to balance sheet reserving for retroactive claims, or long-tail liability, with high incurred but not reported claims, driving a negative impact on capacity deployed, claims histories and renewal premiums,” it says.

Significant pressures remain in professional and financial lines. There are signs of some new capacity entering the market, particularly out of London, but it’s too early to determine implications.

Listed companies continue to see issues around directors’ and officers’ cover, while not-for-profit organisations and private companies are similarly facing unexpected premium increases and a shortage of options.

The uncertain economic environment has implications for professional indemnity, with history showing that services at such times tend to be more heavily litigated, while in workers’ compensation, the market has become harder over recent months, with some significant increases in the costs of schemes.

Gallagher says in the report that businesses are facing very difficult and ever-evolving challenges.

“Operating in a hard insurance market brings its own unique challenges, and it has significant implications for risk management and renewal strategies,” the report says.