Rate increases in Australia will be kept to a minimum this year because of heightened competition, according to a report from the Pacific division of global broker Marsh.

There is enough capacity available for most risks and insurers’ 2012 results improved on 2011 because of higher premiums and lower catastrophe losses, Marsh says.

And market conditions in the Pacific are less affected than the US, which suffered Superstorm Sandy, tornadoes and crop losses last year.

Marsh says insurers will focus on underwriting profits and competitive pricing this year to increase market share.

Stable conditions are expected but insurers face lower interest rates, an uncertain investment outlook and an increase in catastrophe frequency and severity.

Recent bushfires will amplify concerns about bushfire liability exposures, Marsh says.

In mining, insurers are dealing with pit flooding and the risk of strikes overseas, while in other industries, expanded polystyrene panels raise property risks.

More clients are buying specific environmental liability insurance after becoming more exposed to environmental risk because of a legislative review.

The property insurance market in New Zealand is stabilising after the Christchurch earthquakes, Marsh says.

In many earthquake claims insurers were obligated to pay for fortifying buildings’ seismic strength and have since declared they will no longer be responsible for this.

Although the Bridgecorp decision has been overruled on appeal, it may still have repercussions in the D&O market in New Zealand and Australia.

In Fiji, insurers are concerned about cyclone exposure after Cyclone Evan hit the country.

In Papua New Guinea, aviation, cash, bullion and road transport risks are becoming market issues after several insured losses, Marsh says.

For multinational clients, cyber, environmental and supply chain risks remain a challenge.