Ample capacity and improved risk appetite are among key features observed in the Australian and wider Asia Pacific region during the second quarter, broker Aon says in a market update. 

Rates rose 1-10% with the pricing environment seen as moderate across most lines with a few notable exceptions. 

“A two-tiered market continued. In appetite, well-managed risks experienced generally favourable conditions while less-preferred risk types and poor-performing risks experienced a more challenging environment,” Aon says in its Q2 Global Markets Insights Report. 

“Capacity continued to enter the market through new insurers as well as an expansion of appetite from insurers seeking to diversify.” 

Aon says capacity was sufficient across most products and risk types and new capacity entered the market in areas targeted for growth. 

Professional indemnity (PI) was a notable exception as insurers adopted a conservative approach in their capacity deployment, especially for higher-risk professional activities. 

Aon says insurers demonstrated flexibility and a willingness to negotiate, particularly on auto and directors & officers’ risks. 

However cyber, casualty and PI, as well as non-preferred and loss-active risks, experienced a more conservative and rigorous environment, and extensive underwriting information was required. Scrutiny of asset values also continued. 

In property pricing and capacity pressure continued, with divergent outcomes for “target” and “non-target” risks.  

“Signs of insurer competition emerged for non-natural catastrophe exposed risks and lower hazard occupancies,” Aon says. 

“Conservatism continued for high-hazard – including natural catastrophe-exposed – poorly managed, and claims-affected risks. 

“In these cases, availability of capacity remained challenged. Coverage terms continued to tighten to address valuation concerns.” 

On cyber, Aon says insurers have shifted their focus toward targeted growth having satisfactorily de-risked their portfolios over the last 24 months. 

“Most insurers have increased line sizes, expanded industry appetite and removed some of the restrictive terms applied during the challenging market period,” the broker says. 

“Underwriting rigour and scrutiny remained strong; however, organisations demonstrating a commitment to cyber security experienced a more accommodating underwriting environment and broader terms – as well as higher limits – could be achieved.”