Premiums will continue to decline across multiple classes in Australia as competition intensifies amid weak economic growth, according to Marsh.

Insurers are under pressure to protect market share while staying competitive, the Marsh Insurance Market Mid-Year report says.

“Clients continue to focus heavily on cost-control during renewals, as businesses in general are still hurting due to the unfavourable economic environment of low growth and continued falls in commodity prices.

“With the cost of claims creeping upwards and room for premium discounts dwindling, insurers have reached a ‘critical mass’ dilemma, and therefore are turning to more creative ways to stay competitive.”

Insurers have resorted to premium discounts of up to 10% in both catastrophe and non-catastrophe markets.

Premiums are down 0-10% in property, professional indemnity and medical malpractice.

General liability, financial institutions, directors’ and officers’ liability and workers' compensation recorded premium changes of -5% to +5%.

“As we had predicted, [this year] witnessed the growing disparity or a ‘two-speed economy’ between incumbent insurers and those seeking further growth as new businesses,” Marsh says.

“Incumbent key markets, particularly on primary layers, continue to attempt to maintain static pricing, terms and conditions, relying on goodwill over preceding years to encourage brand loyalty and value via wording negotiations and/or previous claims handling.

“In particular in the risk management segment, we have seen insurers attempt to hold fast
on their renewal pricing and resist any further discounting.”

Marsh says cyber continues to be the “hot topic”, with growing client interest in services, construction, retail and manufacturing sectors.

“We have seen an increase in the number of policies purchased, and have also seen early adopters of the coverage increasing their indemnity limits purchased locally, reaching not just tens of millions but, where appropriate, hundreds of millions of dollars, placing purchasing patterns similar to other global benchmarking of limits.”