A two-tier market with diverging pricing outcomes for preferred and non-preferred property risks has continued in Australia, Aon says in a market update. 
 
Line sizes were under review during the first quarter as insurers managed natural catastrophe aggregation and exposures across portfolios, an Australia-focused section of the Aon Global Market Insights Report says. 
 
Capacity remained sufficient although tight for challenging risks such as waste management, food and beverage, and coal, as well as for some catastrophe-exposed geographies. 
 
“Non-catastrophe exposed, low hazard occupancies experienced a favourable market, where pricing reached alignment to technical pricing adequacy while high hazard or poorly risked-managed and claims affected risks experienced more challenging market conditions,” Aon says. 
 
Insurers have increasingly challenged valuations, supply chain exposures and business interruption methodologies, while local and global portfolio remediation has seen insurers exit certain industries and risk types. 
 
“Flood definitions were expanded to incorporate pluvial flood – surface water versus escape from water course – something that buyers should be wary of in carrier selection,” it says. “Looking ahead, insurers are expected to continue to impose modest rate increases and will deploy natural catastrophe aggregate conservatively.” 
 
In casualty and liability challenges continued around sexual misconduct, bushfire liability, frequency exposed business, large worker-to-worker risks and mining – especially, thermal coal – and some coverage reductions were mandated. 
 
Market conditions have remained moderate to challenging in automobile, amid rising claims costs and continued supply chain issues. 
 
Aon says that looking ahead, Taiwan-China tensions may lead to further delays in semi-conductor chips, impacting car supply and in turn, affecting the ability of insurers to service claims, while claims-impacted risks will experience more challenging conditions. 
 
Globally, the quarterly report says key drivers in the quarter included inflation, the impact of a challenging storm season last year, ongoing political friction and bank failures. 
 
Delayed January 1 reinsurance treaty renewals introduced significant price increases, notable capacity contraction, and modified coverage terms and conditions around valuations for property and specialty risks, it says. 
 
Insurers continued to compete to retain and grow their portfolios in targeted areas where rate adequacy had been achieved and the scope of coverages had been clarified.