Plenty of capacity and competition among insurers are keeping rates down as the new financial year approaches.

Brokers across the country report falling premiums in some lines and say insurers are most likely to drop rates to win new business.

Insurers “all try to talk up the price, but they seem to have two different rates – the rates they offer at renewal time and the rates they offer for new business,” Perth-based Cowden director Colin Cowden says.

The difference between the two offers is as much as 10%, Mr Cowden says, warning brokers to be aware of the fact that “there’s a greater willingness to negotiate rates”.

Ballarat Insurance Brokers Manager Neville Marshall has noted cuts of 10-20% for SME commercial lines business placed before June 30.

“It depends on the risk a bit, but we have insurers offering us 20% discounts for new business in June,” he told insuranceNEWS.com.au. “There are some great deals around.”

But discounts do not apply to renewals or commercial motor.

Mr Marshall says insurers are buying business. “It is not like there are businesses starting up like mushrooms, so to get new business they have to get it off a competitor.”

Marsh Australia Executive Director Scott Leney told insuranceNEWS.com.au a soft market will prevail “for a long time”.

“It is fair to say it is only heading in one direction. Supply far exceeds demand in worldwide risk markets.”

Mr Leney says property is seeing reductions of 5% for SMEs and 10% for large corporates, but there are examples “well in excess of 30%”.

Public liability is experiencing a baseline 5% reduction, but with high volatility and, similarly, some cuts of more than 30%. It is a similar story in motor vehicle and financial lines.

Mr Leney says small numbers of insurers have started to walk away from existing business due to unsustainable rates, but this has not been enough to lead the market.

Austbrokers Sydney Account Manager Terry Condylios says rates for property and motor vehicle are the same as last year. In premiums for marine rollover there have been 5-10% rate reductions.

“Some insurers are being more picky in the risks they take,” he said. “For the ones they are hungry for, they go in hard and will reduce premiums.”

JLT CEO Leo Demer is seeing rates soften for renewals on personal and business lines.

He says the market has plenty of capacity following fewer catastrophes in the past couple of years, and he has noticed more advertising from insurers chasing business.

“It’s a tough business for them to be in; I do have some sympathy for them,” he told insuranceNEWS.com.au. “This is when I would rather be a broker than an underwriter.”

He says the June 30 renewals will be keenly watched this year.

“Everyone has their eyes on that and there’s probably a bit of uncertainty as to the degree of movement in the marketplace.”

Mr Cowden has seen many insurance market cycles and says each ends in a slightly different way.

“You have low interest rates in northern Europe and a huge amount of capital looking to get a return – you can get a 1.5% interest rate or you can invest in the insurance market, where you can get 5% or 6%, albeit there’s higher risk.

“They’re prepared to trade off the risk for a higher return.”

With the economy showing relatively low growth, insurers are hungry for new business to increase their volume, he says.

A subdued business climate is having an impact, with several brokers saying clients are looking to cut costs where they can.

Insurance House director Gary Gribbin says the market is competitive across the board, but brokers must still work hard to convince clients to insure to the value of their business, even when their cost of insurance is falling.

“It is a continuing exercise,” he said. “Trying to persuade SMEs to buy business interruption is difficult – they just don’t get it.”

The professional indemnity market remains competitive, with more than 40 insurers chasing a comparatively small premium pool.

Mr Cowden says the liability market is soft and the property market is showing signs of softness, while Mr Condylios says rates for professional risks and liability are down 10% on a year ago.

After large increases since 2011, even parts of Queensland are seeing some relief in property classes.

“We aren’t finding any aggression in rates,” Rockhampton-based Piranha Insurance Brokers Principal Broker Peter Peirano told insuranceNEWS.com.au.

He says rates in central Queensland do not change much, but strata insurance is still difficult, even for new buildings constructed to the highest standards.

While commercial and corporate rates have either plateaued or fallen, insurers are trying to push up residential premiums. This is partly driven by repricing with the inclusion of flood cover.

Adelaide-based Donnelly Insurance Brokers MD Mike Donnelly says rates on domestic lines are stable but have the potential to fall due to increased competition from the direct market.

“It’s very, very competitive,” he told insuranceNEWS.com.au. “Brokers are being forced to offer less comprehensive coverage for clients if they are looking for price over coverage. It does depend on individual insurers and how their claims history is running.

“Home and contents seems to have stabilised and is quite profitable for insurers, and motor also seems to be fairly stable. Companies are starting to make money on motor now in many states.”

Mr Donnelly says it is getting harder for brokers offering personal lines to win new business, due to competition from the direct market.

Mr Condylios has seen personal lines rates rising, but Queensland brokers, including in the north, have told insuranceNEWS.com.au that after three years of large increases, homeowners are finally paying steady rates.

Brokers do not see conditions changing any time soon.

Mr Leney believes that without any external market shock, soft market conditions will prevail until the end of the year and maybe into next year.

“At some point we have to get to a minimum price where insurers can’t make money, but we are not there yet,” he said.