The cost of insurance seems to have reached a plateau, according to figures from the latest National Insurance Brokers Association (NIBA) survey. The 2003/04 Market Conditions Questionnaire – sent to more than 2000 brokers during the June renewals  – shows that increases were much less severe than in previous years, when some clients suffered rises of up to 200%.

The survey shows that insurers did not cave in to pressure from consumers to drop rates after reporting better-than-ever financial results. However, more companies are looking at offering niche insurance products, adding more competition to the market.

NIBA CEO Noel Pettersen says the cost of some commercial insurance classes has fallen slightly since December, and long-tail classes like public liability and professional indemnity are still rising.

The fact that public liability rates are rising – more than half the brokers who responded to the questionnaire estimated that public liability and professional indemnity premiums had risen between 10% and 30% – is at odds with the insurers’ belief that these rates are falling. This may be because of the number of public liability schemes for community and sporting groups which now bypass brokers.

More than half the brokers estimated that directors’ and officers’ premiums had risen by the same amount, mainly because of more claims and less market capacity in that class.

Substantial professional indemnity rises were most prevalent in the financial services sector, closely followed by real estate and other commission-based professions. Construction and medical professionals were also affected.

Mr Pettersen says the rises have been far less severe than in previous years when the market was recovering from a series of setbacks. Brokers across the board experienced a more flexible approach from underwriters this year. And although they don’t want the market to become soft again, they feel that prices are fattening out.

“This renewals period shows there was some room for softening in certain classes,” he said.

On a scale of 1 to 10, with 10 being the most difficult, 27% of brokers rated the market at 5. Unlike last year, no brokers rated the market at 10.

Mr Pettersen says capacity is being restored to the market as more insurers consider hard-to-place niche products.

“More availability of insurance is a positive move for consumers. Underinsurance is still a very real problem for Australia – and an increase in local availability means consumers don’t necessarily have to head offshore to get cover.”