Property rates increased by 8-15% across all classes of risk last year, Marsh says in its 2012 Pacific Market Insurance Report.

But the broker says loss-affected covers have seen much larger increases and notes that insurers are also seeking to impose coverage restrictions across both Australia and New Zealand.

The report, titled “Navigating the risk and insurance landscape”, says these conditions will continue this year.

The availability of earthquake capacity to New Zealand has become unpredictable as insurers reach the limits of capacity they can provide for Wellington, Marsh says.

It says Zurich’s decision to stop providing natural disaster cover there has required brokers to find an additional $5 billion of capacity.

Many Ansvar clients have been able to find alternative cover after the insurer pulled out of earthquake cover in December, but they have had to take a maximum loss limit for natural disasters and/or forgo any earthquake cover.

Although the report says the impact of the quakes on the insurance market is becoming better understood, “the ability to obtain full earthquake insurance in the medium to longer term, however, is still uncertain”.

Marsh says there has been a trend for insurers to focus on increasing premiums and deductibles for natural disasters and new clauses are emerging in policies, such as “unrepaired damage” which remove any liability where there is previous damage, as well as new restrictions or no coverage available for buildings built before 1936.

There is also no automatic reinstatement of insurance following damage from a natural disaster.

The report says there may be a mild withdrawal of capital across the region due to some insurers holding the bonds of countries with sovereign debt problems and the impact of falling interest rates and share prices.

In the casualty market, Marsh says capacity is plentiful, with most premiums flat and some clients obtaining a reduction in premiums.

There is some pressure to increase rates in professional liability (PI) covers, as the turmoil in global financial markets feeds into claims.

Marsh says financial institutions cover is particularly affected, with standard increases of up to 10% on many risks. Average PI rates are generally stable.

Capacity for directors’ and officers’ risk has been trending down, with insurers “haunted” by securities class actions.

In specialist lines, Marsh says rates in trade credit remain competitive despite rising insolvencies, and the workers’ compensation markets are expected to transition to a hardening market.

It also says the life insurance market will double in size in the next 10 years. The cost of cover has been reducing for years and has never been so cheap.