Commercial rates in Australia crawled up 1% in the third quarter as a 5% contraction in financial and professional lines pricing continued to drive overall moderation, broker Marsh says in its latest Global Insurance Market Index. 

The 1% rise follows a 2% increase in the second quarter and is below the 3% growth in third-quarter pricing globally. 

Rates in the Australia-led Pacific market – Australia accounts for 80% or more of Pacific business tracked by the index – have been moderating since posting a record 35% rise in the fourth quarter of 2020. 

“The conditions for buyers are definitely improving,” Marsh Deputy Head of Global Placement Pacific Scott Eccleston told insuranceNEWS.com.au. 

“In the previous quarter it was cautious underwriting and insurers are certainly now in a growth mindset…there’s been introduction of new capacity across most classes of insurance and new capacity leads to more competition and better pricing for buyers.” 

In the financial and professional lines class, directors’ and officers’ pricing continued to fall, with many clients experiencing declines of 15% or more, Marsh says. 

Generally, competition remained strong for primary and excess layers from both new insurers and legacy carriers and macroeconomic impacts, such as inflation and interest rate pressures, were important factors for underwriters. 

Cyber pricing went up 6% but Marsh says the pace of increase is slower than the 8% rise seen in the second quarter. 

Conditions in cyber are becoming favourable for insured as insurers compete for business, leading to more coverage and retention options such as increased limits, decreased retentions, and improved pricing for a similar policy structure. 

Underwriters focused on critical risk, dynamic privacy regulations, and the continued threat of ransomware, and risk management remained important especially in relation to clients’ ability to mitigate ransomware threats. 

Property rates moderated in the third quarter, rising 2% compared with 5% in the preceding period and there were some positive signs as competition returned with the introduction of capacity. 

However, loss-impacted and catastrophe-exposed risks are still seeing the highest increases, says Marsh. 

“Underwriters remained cautious, making it essential at renewals that declared values be supported by formal valuations and/or adequate inflation loadings.” 

Marsh says in New Zealand the emergence of flood risk, primarily during the first quarter, has led to greater scrutiny by underwriters of coverage, pricing, and insurers’ own loss modelling. 

In casualty Australia-Pacific pricing rose 5% after accelerating 7% in the second quarter. Marsh says new capacity in the market fostered increased competition.