This year will see difficult conditions for many insurance buyers as the market continues to harden and underwriters pull out of certain classes, broking leaders have warned.

In a quarterly market update, Honan Insurance Group says there will be “a continuation of upward pricing pressures” throughout this year.

While brokers benefit from rate rises, Honan predicts a growing discrepancy between low and high-risk business and insurers’ increasing “willingness to walk away” if they are not happy with profitability.

“We are already witnessing global underwriting markets in Lloyd’s ceasing to write certain classes of business such as professional indemnity and marine – and we expect this to continue,” CEO Australia and New Zealand Andrew Fluitsma said.

“Insurer risk selection and appetite will continue to drive underwriting behaviour leading [to] a growing rating/pricing gulf between low hazard and less desirable occupancies.

“Underwriting profitability remains the key performance metric in the medium term as insurers continue to focus on good performing and risk managed businesses”.

Insurance Brokers Network of Australia Chairman Gary Gribbin says the year will be “really lumpy”, with business as usual in some areas but others seeing major rate increases.

He highlights flammable cladding exposure and the recycling industry as major areas of concern.

Honan predicts “significant correction” in high-hazard areas of the food and beverage industry, and remediation of directors’ and officers’ portfolios continues in the wake of spiraling class actions.

It also says insurers are moving to control exposures to natural catastrophe perils, with the impact felt most in Queensland and WA. “This is being seen in a tightening of underwriting in the form of reduced limits, increased pricing and capacity withdrawals.”

But Mr Gribbin says it’s not all bad news.

“Most brokers are going pretty well. There are some very difficult areas but it is not yet a universally hard market.”

AUB Group CEO Mark Searles told insuranceNEWS.com.au availability in some areas is reducing.

“Having recently looked at what is happening in the Lloyd’s market there is clearly a drive to manage capacity,” he said. “But this is where good broking houses with strong underwriting relationships can negotiate good outcomes for clients.”