Rates across most commercial lines are still rising but the pace of increase is weakening, actuarial firm Finity told its insurance clients at a webinar this month. 

“We expect the higher rate increases to be more targeted where they are required, and we expect more moderate rate increases for the majority of risks,” Finity says in its outlook for this financial year FY24. 

“For most classes we expect there still to be overall increases in premium rates in FY24, but the rate of increase will slow down compared to what was seen over FY23.” 

But financial lines are an exception, with prices set to stay flat or even decline, continuing the trends seen over the past six months, Finity said. 

Financial lines rates hit the brakes in FY23, marking a distinct departure from the past few years of escalating rates. 

Finity says increased competition, particularly in directors’ and officers’, has even led to material rate reductions and signals a drastic shift from a hard market cycle straight to a soft market cycle. 

The Finity webinar caps off the actuarial firm’s recent release of Optima, its annual report on the state of the general insurance industry plus ongoing challenges and trends in the sector. 

In FY23 commercial lines gross written premium (GWP) recorded its fifth straight year of double-digit growth. Finity estimates the GWP pool now exceeds $27 billion, almost double what it was in FY17. 

“A significant driver of the increased GWP over recent years is strong rate increases off the back of the hard market,” Finity says. 

“In addition, we have seen more capacity entering from overseas in certain segments which has both increased competition in the market and helped to support the top line growth. There are now clear signs that the hardening market is tapering off.”

Insurance clients heard during the webinar that technology transformation has led to an “evolution” in distribution trends. 

“We have seen growth in contestable platforms, opening up new opportunities for efficiency and value – albeit at a high cost, and with added considerations around maintaining or growing profitability,” Finity says. 

“Technology is also acting as a key enabler for the broker channel – allowing brokers to add value with better knowledge and insights.”