Customers should be wary of an influx of new entrants to the Australian financial lines market, according to Vero.

“Not long ago there were fewer than 10 insurers providing financial lines in Australia and now there are more than 40,” Suncorp Commercial Professional and Financial Risks National Manager Ed Rawnsley said.

He says customers now have more choice but could be left scrambling for replacement cover if an insurer does not offer renewals or leaves the market as conditions change.

“Historically, some insurers have entered and exited particular classes of business as the market cycle changes over time,” Mr Rawnsley told insuranceNEWS.com.au. “It can be the case that the last insurers to enter the market are the first to leave.”

A JP Morgan/Taylor Fry report warns of falling profitability in the sector as new entrants discount premiums to lift market share.

Vero is Australia’s largest insurer of financial lines, including professional indemnity and liability cover for directors and officers, management, associations, trustees and financial institutions.

Parent Suncorp says a number of large international insurers have chosen to diversify their portfolios, attracted by a stable legal and economic environment.