The mid-year renewals have seen a change in insurers’ risk appetite, although pockets of concerns still remain, particularly for cat-affected accounts, according to brokers. 

Honan says the insurance market is showing “promising signs” of growth in the construction sector, with a heightened willingness to take on associated risks. 

“The key reasons for this stem from increased appetite from global insurers, along with more capacity from London that is flowing into local agencies,” National Head of Corporate Insurance and Risk Solutions Poppy Foxton said. 

“In the realm of large property risks, insurers are vying for market dominance in the arena of high-quality assets such as non-catastrophe exposed locations and well-constructed properties.” 

It’s a different story for sub-par risks with “sub-standard construction or inadequate risk management.” Ms Foxton says these accounts “remain a difficult sell and are subject to increased rates.” 

The broker says the impact of natural catastrophes globally and the restrictions from the January 1 treaty reinsurance renewals have spilled into the property insurance space for sporting associations. 

“Insurers are restricting cover for floods to clubs that are located near a river or watercourse,” Ms Foxton said. 

“This has a direct impact on many sporting associations, as their zoning and clubhouse locations are often situated in low-lying areas or where residential construction is not permitted. 

“As a result, many sporting organisations are required to self-fund increasing amounts of risk exposure for future major catastrophes.” 

A mid-year update from global broker Aon reveals the challenges facing Australian insurers after last year’s catastrophic floods and other natural disasters  

Reinsurers have sought to move retention levels away from frequency catastrophe events and less well-modelled secondary perils like wildfire, hail and flood events, Aon says. 

“As a result, return periods of attachment have increased to around one-in-six year from one-in-three year levels.” 

“Faced with higher net retentions, insurers in Australia and New Zealand have intensified portfolio optimisation efforts and explored opportunities for capital relief.” 

On a more positive note the Aon update says new capacity from the cyclone reinsurance pool has eased property catastrophe rate pressure for insurers. 

“The market benefited at the mid-year renewal from new capacity provided by the [pool]. As a result, the market purchased around 10-15% less catastrophe limit at mid-year than in 2022, easing demand-supply pressure at the renewal.”