Australian market conditions have continued to stabilise but some pockets are still challenged, particularly catastrophe-prone property and casualty risks with heavy US exposures, Aon says in a global second-quarter report. 

Property pricing softened in the latter part of the quarter, but high-hazard, disaster-exposed, poorly risk-managed and claims-affected risks continued to experience upward rate pressure.

The tightening of property terms and conditions seen over several years has also slowed, and Aon anticipates more focus on contract simplicity in the short to medium term as insurers balance the need to grow and transact efficiently, ushering in a more commercial approach to clause language. 

Inflationary pressures drove modest price increases for motor and liability, while directors’ and officers’ and cyber experienced favourable pricing conditions due to increased competition. 

“Improved industry performance has positively impacted insurer confidence and capacity is ample across product lines,” Aon says. 

Underwriting has remained prudent as growth aspirations are balanced with discipline amid an increased willingness to consider and accept risks, while deductibles have generally stabilised after the portfolio remediation undertaken in the past few years. 

A softer cyber market has featured greater appetite and healthy competition after a period of relative stability. 

“It remains to be seen how current compounding factors such as the increasing number of cyber incidents and insured losses, as well as lower barriers to entry for criminals seeking to exploit organisations, may impact the market in the future,” Aon’s report says. 

In New Zealand, underwriting and pricing measures taken at past renewals have led to a more positive environment for liability, D&O and cyber. 

Property cover remained readily available, except for catastrophe-exposed or higher-hazard risks. 

“Pricing increases continued but further moderated, driven by a benign weather environment and a moderation of reinsurance pricing increases, albeit accompanied by increases in insurer retentions.” 

Affordability remains a factor as historic premium increases, couple with a challenging post-covid economic environment, continue to impact buyers’ ability to absorb further cost increases. 

The Global Insurance Market Insights report says overall insurer growth ambitions continue to translate into a competitive, well-capitalised market environment characterised by price moderation, underwriting flexibility and the availability of coverage options, especially for preferred risks. 

But the landscape remains “somewhat fragile” given high levels of natural catastrophe insured losses last year, while adverse reserve development and social inflation make for an uncertain casualty outlook. 

The US overview says property rate increases moderated more in the second quarter than the first, with most placements ranging from single-digit increases to low double-digit decreases, representing the most positive market since the third quarter of 2017. 

The report is available here.