Rate increases are easing but brokers are concerned about a potential “race to the bottom” as the market turns, and some risks are still “no-go areas” for insurers.

insuranceNEWS.com.au asked intermediaries for their views as the busy June 30 renewals period draws to a close. Insurance policies can renew any time but traditionally there is a flurry of activity as the financial year ends, and more policies are remarketed when premiums are rising.

“June 30 happens each year – still we all go crazy,” one broker commented.

Many brokers say this year’s renewals back up the trend of rate increases easing for “good-quality risks”.

“There are still exceptions, with motor and domestic home still suffering at the hands of recent portfolio performance, where premium rate increases are still being pushed through,” Insurance Advisernet GM broking and risk services Josh Hamill said.

“Conversely, financial lines risks have become more competitive, with rate and premium reductions becoming more prevalent this June 30.”

Mr Hamill says certain occupations and perils “remain no-go zones for insurers and agencies”, but markets have “started to broaden their risk criteria appetite, and in turn their capacity limits”.

“It’s encouraging to see markets returning to ‘underwriting’ a risk,” he said.

Aviso Group CEO Travis Kemp agrees there is “competitiveness back in the market”.

“London markets and Australian agencies continue to drive an aggressive price strategy on quality Australian business, particularly in property (with minimal natural catastrophe exposure) and financial lines.”

Mr Kemp says risks with nat cat exposures “remain challenging”, but parametric markets are helping “fill that void”.

Peter Griffiths, senior account executive at Queensland-based Ausure Blended Broking, says insurer risk appetites are low and selective, “hence increased movement to agencies”.

“Far North Queensland risks are, as always, harder to place and this is being felt in the farming sector, where access is limited to only a few insurers, and this is severely impacting the premiums,” he said.

Mr Griffiths also highlights lithium-ion battery fires as a concern “due to a surge in claims” and flags property owner coverage for those with tenants such as tattoo parlours and tobacconists as difficult to place.

Abbie Wilson of National Insurance Brokers, based in Horsham, Victoria, says premiums in regional and rural areas are “still relatively tough and rising”.

“Our farmers are still feeling the brutal pinch, with increasing premiums and less options for tailored solutions,” she tells insuranceNEWS.com.au. 

“Finding suitable cover for risks is still challenging and we expect this to be the case for some time. Domestic homes here in Horsham are deemed a significant flood risk by one insurer, even when there is no river in sight.”

Josh Ryan, MD of Queensland-based Hunter Broking Group, says it’s still “very tough” to find markets for non-desirable risks, but his brokerage has seen “more competition for certain submissions where we had previously not had any interest”.

“The Facebook Group we started, called the Insurance Support Network, now has over 500 members. This group is receiving a large volume of enquiries from Australian brokers each day, so it seems there may still be a lot of difficulty with placements in Australia.”

While brokers welcome conditions easing for clients, some are concerned about a potential flip to unsustainable pricing.

“We don’t feel this is the time for a race to the bottom on pricing,” Mr Hamill said. “We are just at the beginning of a softer market cycle, with some easing for our policyholders who have incurred some substantial cost and risk retention uplift in recent years.  

“We wouldn’t want to see a return to that position on the back of insurers’ worsening portfolio performance due to substantial pricing reductions.”

Mr Kemp says the “greatest concern” is the market maintaining “a level of sensibility as it becomes more aggressive in obtaining market share. Sustainable options are important for our clients looking at longer-term objectives for their risk and insurance programs.”

However, Mr Ryan remains concerned about high premiums and calls for government intervention in some areas.

“We are concerned with the cost of insurance in comparison to the cost of living,” he said.

“We understand why premiums need to increase. However, we also understand that for some, insuring appropriately is not financially viable. 

“We hope that at some point there is further government intervention for catastrophe-driven regions.”

What are your views on this year’s June 30 renewals? Email editor@insurancenews.com.au

From Insurance News magazine: How Ardonagh’s “milestone” bid for PSC reshapes the Australian broking landscape