Double-digit rate increases for property, construction: WTW
Property and construction lines face double-digit rate rises in the months ahead after last year’s floods disasters, broker WTW says in its latest Australia market update.
For loss-affected accounts and insureds in catastrophe-prone regions pricing may even exceed 25% in some cases as insurers’ appetite towards riskier clients hardens.
WTW predicts rates of 10-25% or higher for catastrophe-exposed property accounts and 15% and above for loss-affected or challenging property risk.
The broker says natural catastrophe sub-limits for flood, cyclone, bushfire and hail are being imposed on property accounts with significant exposure or loss history.
“Those with challenging occupancies, natural catastrophe exposures, significant loss history and/or a poor strategy require greater effort to achieve desired outcomes,” WTW says.
“Capacity constraints for loss affected and natural catastrophe cat exposed accounts continues, with international market participation a requirement to complete placements.”
Property accounts in non-catastrophe areas or with no prior loss history can expect rate increases of 0-10% or above.
“Property pricing continues to be two-paced,” WTW says. “Accounts that are desirable and attract competition can generate optimal terms, conditions and pricing.”
It’s a similar outlook for the construction line, with a “two-speed” Contracts Works market expected to play out this year.
Contracts Works can expect rate movements of 5-15% or above, Construction Liability (primary and excess) flat-15% and Design & Construct Professional Indemnity flat-20%.
WTW says Contracts Works clients operating in flood-impacted regions along the east coast will see higher rating increases and tighter terms and conditions for natural catastrophe events than the ones in less riskier areas such as Victoria and SA.
“As a result, we expect to see continued upward pressure on flood/hail excesses with insurers expectations that clients take on more of this exposure,” WTW says.
On cyber the WTW market update expects pricing to become increasingly less volatile.
The broker says further new capacity is likely to enter the cyber market with several insurers identifying the product line as a key area of growth given the demand for cyber insurance capacity from both existing and new buyers.
“Insurers in Australia remained unscathed from the recent other large scale cyberattacks either due to non-renewal of cyber insurance, or the cover being underwritten in the London/Asian market,” WTW Financial Lines’ Senior Associate Cyber and Technology Anthony Kumar told insuranceNEWS.com.au.
He says the cyber breach on Latitude Financial “has battered, but not bruised Australian insurers” and that WTW will be watching how the market responds to the event.
