The current hardening market is sustainable, according to one industry leader.
Mark Searles, CEO and managing director of AUB Group, said he believes that the current crop of pricing increases is sustainable and prices will continue to trend upwards over the next several years.
“We expect those low to mid-single digits to move toward mid-single digits over the next two years and that has a positive effect on any area that is prone to premium rate movement,” Searles told Insurance Business. “We are just coming off the bottom of one of the worst soft cycles for donkey’s years so we are now starting to see rate start to go through. We will start to see that being a little bit more consistent - so I think we will go to mid-single digits in those two years.”
While the prolonged soft cycle is finally lifting, it remains to be seen how long pricing increases can last. The latest Marsh Global Pricing Index found that Australia continues to lead the world in terms of its hardening commercial market as prices have now risen for four consecutive quarters.
Searles noted that, looking back over the previous half year, it has proven difficult to single out markets that are being impacted the most by pricing changes as increases vary by class of business, geography and new versus retained business.
“There doesn’t seem to be a catch-all or one way of doing things, which is why we haven’t gone out and talked about an average figure because it wouldn’t make any sense,” Searles continued. “Quite frankly, what we think will happen is over the next year or two we will get to an averaged mid-single digit arena but there will be outliers there as well.”
