Australian insurance market sees stabilization in 2024
Australian insurance market sees stabilization in 2024 | Insurance Business Australia
Insurance News
Australian insurance market sees stabilization in 2024
Increased market competition ease burden on buyers
Insurance News
By
Mav Rodriguez
The Australian insurance market is seeing a shift in dynamics, according to Marsh McLennan’s 2024 Mid-Year Insurance Market Update. After years of rising premiums and tightening conditions, the first half of 2024 has brought much-needed relief for insurance buyers.
According to the report, the property insurance market has seen rate changes ranging from a 10% reduction to a 5% increase at renewal. Liability insurance rates have remained mostly flat, with changes between 0% to 2%, while directors and officers (D&O) liability insurance saw significant reductions, with premiums dropping between 15% to 25%.
The professional indemnity insurance market also experienced rate reductions, with changes ranging from flat to a 20% decrease.
This competitive landscape is fueled by better loss ratios, higher investment returns due to rising interest rates, and a more favorable reinsurance treaty renewal process earlier in the year. This notably hasn’t been observed since 2017. However, challenges remain, particularly in areas with significant exposure to natural catastrophes, such as New Zealand and the US.
The liability insurance market in Australia has become more competitive, with broad insurer appetite, though US exposures have led some insurers to reduce capacity and adjust pricing. Environmental issues, particularly the handling of per- and polyfluoroalkyl substances (PFAS), continue to be a critical area of focus for insurers, influencing both general liability and environmental impairment liability markets.
In the financial and professional lines sector, the market has softened, with notable rate reductions observed in the first half of the year. Marsh’s Fast Track placement facility has played a significant role in driving this competitive environment with an additional 7.5% quota share capacity.
Looking ahead, the report suggests that unless unforeseen catastrophic events occur, such as those from the North American hurricane season, the positive trends in the Australian insurance market are likely to persist throughout the remainder of 2024.
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