Regulation and compliance is the top issue facing underwriters, according to this year’s JP Morgan Taylor Fry General Insurance Barometer.

The Hayne royal commission has contributed to the regulatory focus, while the barometer report also highlights the Productivity Commission’s review of financial services competition, which made recommendations around underwriting transparency and add-on insurance.

The growing threat from technological advancements, profitability and competition in commercial classes, particularly directors’ and officers’ (D&O), and weather also rank as major issues.

Taylor Fry Principal Kevin Gomes says there is recognition that the commercial cycle has turned, but further remediation is required in some areas.

Premiums in commercial classes grew 9% last year, accelerating from a gain of 3% in 2017, and are expected to increase a further 8% this year.

The commercial combined operating ratio improved to 96% from 103%, but the ratio remains in unprofitable territory for fire and industrial special risk, while D&O continues to see surging premiums and rising claims activity.

Concerns identified by brokers included pricing and profitability, regulation, technology and insurtech, excess competition and capacity, particularly in the hardening industrial special risk market, and underwriting standards.

See ANALYSIS.