New capacity and increased competition are easing premium rates in some segments after a long hard cycle, Gow-Gates Insurance Brokers says.

Insurer appetite has generally risen and moderate rate increases aligned with inflation or reductions are likely for some buyers, it says in a market update.

“Over recent months, we’ve seen a continuation in the trend towards a softer market,” divisional manager of executive and professional risks Simon Carter said.

“Capacity has increased and competition continues to grow across many financial lines policy classes. We are seeing insurers becoming more willing to review pricing and coverage.”

In cyber insurance, healthy competition between insurers led to a 2% rate decline in the first quarter, with “continual, proactive support” offered to insureds.

Financial lines rates fell 10% in the first quarter, with greater reductions for attractive risks, though Gow-Gates warns a “swift pricing correction may follow ...  impacting management liability and private company directors’ and officers’ insurance”.

Rate pressure remains for construction, legal, second-tier lenders and property development, and workers’ compensation premiums are set to rise across most states.

Natural catastrophe risks and buildings made with insulated sandwich panels, cladding and asbestos continue to attract high rates, and contractor and labour hire claim costs are affecting placement as insurers continue to be wary of these exposures.  

However, after double-digit increases in response to corporate property claim cost pressures, Gow-Gates sees signs of easing and an “increase in market appetite, capacity and competition, which is helping achieve more favourable results for policy placements”.

It expects an uptick in employment practices liability claims over the coming year – for example, relating to the new “right to disconnect” – and says it is “important for businesses to have new policies in place to address this ... to reduce the risk of any disputes that may emerge”.

In aged care provision, Catholic Church Insurance’s run-off last year means the “same levels of cover simply aren’t available at the premiums that clients were paying previously”. A new Aged Care Act from next year widens the scope of who can be held accountable or have a claim brought against them.

“There is potential for amendments to definitions for ‘insured persons’ and it will be important to ensure that appropriate levels of cover are offered.”  

Motor and heavy vehicle fleet premiums are rising as “the technology that is in vehicles now, combined with supply chain hold-ups, parts shortages and increased labour costs, have resulted in claim costs being heavily impacted”. 

Electric vehicle battery damage can result in a total loss and the update says insurers “can’t fully understand the true risk of insuring EVs”.

“Risk management to avoid the claim event where possible is important, as insurers are trying to manage profitability in this changing environment,” Gow-Gates said.

See the report here.