Liability rates in New Zealand hardened in the first half of this year, but predicting future movements has become increasingly difficult, leading broker Marsh says.

Noting a “flight to quality” in the market, Marsh says in its latest update on the NZ liability market that rates are set to rise over the next year but premium increases are far from uniform and many lines remain competitive.

It says a growing awareness of liability and compliance issues among insurers has forced “targeted corrections”, tighter coverage and stricter underwriting.

“The influence of the global markets is relatively benign at present but could change very quickly,” Marsh says. “There has never been a market like this and it is becoming increasingly difficult to predict its evolution.”

Marsh’s update last September showed premiums across liability classes rose 5-10% last year. The company says this trend continued during renewals in the first half of this year and should extend into next year.

Factors behind future price increases may include the recovering property market and tighter government oversight, the company says. The New Zealand insurance market is undergoing a shift towards tighter regulation, requiring all insurance companies to be fully licensed by September next year.

“While there are increases, the market is not a classic hard market,” Marsh says. “With the market not hardening as anticipated, underwriting decisions are increasingly being made with a long view to the future.

“For new business we are still seeing competitive premiums for quality accounts, but appetites are increasingly conservative.

“The local insurance market continues to reconfigure itself and we are seeing historical appetites shift between insurers. These continue to shift due to poor claims trends, overseas parent pressure and treaty restrictions, to name a few.”