Rates in New Zealand are rising, fuelled by external factors including the professional indemnity (PI) crisis affecting Australia’s building industry, a Willis Towers Watson market update says.

Insured losses sustained in major markets, the industry’s move to remediate risk and greater regulatory oversight are the other price triggers.

“It is fair to say that New Zealand is no longer a buyers’ market,” Willis Towers Watson New Zealand CEO Peter Lowe said.

PI cover providers are demanding tougher conditions, spooked by the cladding crisis in Australia and the UK.

UK-based Landmark Underwriting, the last provider of exclusion-free PI in Australia, left the market this month to limit its exposure to the trouble-plagued building industry.

“There has been a significant shift in the PI market globally, and insurers in New Zealand are starting to follow suit,” Willis Towers Watson National Manager Construction Tony Seto said.

“Aluminium composite panels continue to be an issue for insurers as they impose exclusions and conditions to address the increasing level of claims experienced overseas.

“The market capacity available for project-specific PI placements has reduced significantly. This makes achieving the contractually required limits increasingly challenging.”

Claims-affected accounts can expect “a lot greater increases” in premiums, he says, while clients with favourable track records are in line for moderate rises.

The directors’ and officers’ market is also feeling the effects of hardening conditions in Australia, with a surge in class actions triggering sharp rate increases.

Companies with dual listings in New Zealand and Australia face more stringent requirements from insurers and underwriters.

“We are forecasting that premium rates will continue to increase, and more dramatically so where clients have a dual listing in Australia or require Side C cover,” Willis Towers Watson’s National Manager Financial and Executive Risks Nigel Grantham said.

Side C cover typically insures listed companies against liabilities arising from securities market conduct breaches.

“Insurers will reduce capacity and we envisage more co-insurance among insurers to fill clients’ required capacity,” Mr Grantham said.