Insurance capacity is rising and competition is at an all-time high, according to Aon Australia’s first-quarter Insurance Market Update.

“In previous market cycles where competition has been high, we have seen reduced interest from international markets as they look to achieve a better rate of return from other geographies,” Aon Risk Services Pacific Chief Broking Officer James Baum says.

“In recent months we have seen London, European and Asian markets take an additional interest in the region, as they look not only to maintain market share, but grow it.”

Competition is increasing for business in the SME segment as the large corporate market proves tougher to penetrate.

In the professional indemnity market more than 40 insurers are looking to expand in the SME sector, according to Aon.

New Zealand, where natural catastrophe exposures are still a focus, is also experiencing increased competition. Earthquake rates and deductibles have softened but remain higher than before the Canterbury catastrophe, the report says.

An overall recent trend of falling premiums appears likely to persist. “While capacity continues to grow and insurers don’t seem to have an appetite to diversify their offerings into new areas, it would seem logical that pricing will continue to reduce,” Aon says.

Also see ANALYSIS