Businesses need to step up their focus on resilience and mitigation as prices continue to rise and terms tighten, specialist insurer FM Global says.

The more difficult market conditions facing insureds are set to persist well into next year, with the COVID-19 outbreak and last season’s natural catastrophes fuelling existing trends, Operations Manager Lynette Schultheis says.

Reinsurance rates are also on the rise, while low interest rates are putting pressure on insurers’ investment returns.

Businesses in high risk areas, including for flood, wind and bushfires, are among those that need to be proactive in managing risks through mitigation, while they may also need to consider higher retentions, she told insuranceNEWS.com.au.

“If you have a lot of natural catastrophe exposure, many times that is heavily reinsured and you should expect those costs are going to go up,” she says.

Ms Schultheis says cyber is another area where there’s an increasing need to focus on reducing potential losses, with the COVID-19 outbreak contributing to an uptick in claims.

Insurers are continuing to take a more disciplined approach as the market corrects from an extended period of soft pricing that has undermined profitability.

“It is not that there isn’t capacity out there, insurers are just using it more wisely,” she says.

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