Commercial lines are continuing to see rate increases after five consecutive years of double-digit premium growth, but with some moderation in parts of the market, Finity says. 

Finity Principal Susie Amos, who this month hosted a one-hour seminar delivered by the firm’s insurance experts, says profitability levels for commercial have improved following rate gains, encouraging some additional capacity in parts of the market. 

“With the significant increase in premium rates that has happened in recent years, it has become quite attractive for capital to come back into the market,” she tells insuranceNEWS.com.au. 

“We’re seen a lot more re-entry and growth, particularly in those areas that have had material rate increases, or in the areas that are known to have more margin.” 

Financial lines have moderated significantly, particularly in directors’ and officers’ cover. Some insureds have seen rate reductions, while capacity is more available for large listed companies, which may still be experiencing premium gains.  

Finity says property and motor classes, which have seen double-digit claim cost increases over the past couple of years, are likely to see a gradual moderation of inflationary pressures, but that will still take a couple of years. Rising reinsurance costs are also an issue for commercial property. 

In liability, historic abuse claims, work injury claims and psychological claims have caused reserving difficulties for insurers, which have responded through a combination of higher reserves, higher premiums and increased deductibles for work injury. 

Most insurance clients are still able to get liability insurance although at a higher price but there are some more specialised segments that have struggled to find capacity including organisations providing services to children.  

Ms Amos says the frequency of work-related injury liability claims, and the time taken for them to emerge, has contributed to the reserve strengthening and rate increases, with insurers reviewing potential exposures. 

“Their view of profitability is now different for their new risks coming through, and they need to allow for that significant level of worker injury, or worker-to-worker exposure,” she said. 

Finity also said that the Medibank and Optus data breaches in the past year have shown the significant business interruption, monetary cost and reputational hit that a cyber event can cause. 

But after a period of high premium increases and stricter risk selection, more capital investment in the class of business in Australia has seen premium increases moderate, even after the major cyber breaches.