Honan Insurance Group (Honan) has released its latest quarterly market update, laying out developments in different insurance sectors, particularly corporate, claims, financial lines, builders and construction, and private wealth.
Poppy Foxton, national head of corporate insurance and risk solutions at Honan, shared key takeaways in different areas of corporate insurance, noting how premiums for high-risk property and liability coverage have continued to climb, while moderate risk SME commercial insurances have become “harder to place.”
Updates on life science liability, clinical trials, health tech, and medical were also part of the report. According to Foxton, there was a 5-10% premium increase across life science product liability accounts, and the flat market conditions for non-evasive clinical trials persisted thanks to “a healthy level of local insurer competition.” Additionally, e-health insurance products combining professional indemnity, technology errors and emissions, intellectual property, and cyber liability have proven to be popular among startups.
“Long-standing insurance programs may need to be revisited and challenged as premium increases for certain risks accelerate,” said Foxton, adding that “significant retraction in property insurance offered to businesses with assets in flood-impacted areas” could be expected over the course of FY23.
“If coverage is provided, higher deductibles and decreased limits will be applied,” she said.
Faramarz Ostwari, head of CIR claims at Honan, focused on the impact of this year’s South-East QLD and Northern NSW storm and flooding events. Damage from these events is estimated to have reached $5.28 billion, with a total of 233,000 claims submitted to date. According to Ostwari, 55% of submitted claims remain open due to labour and material shortages, which are causing delays in property repairs and restorations. Additionally, the question of whether business interruption cover under property damage policies will extend to losses from business closures during the COVID-19 mandated shutdowns remains up in the air.
Henry Clark, Honan’s head of professional & executive risks, said insurers have become more focused on “new business and growing their portfolios following improved loss ratios.” He also noted “buyer-friendly market conditions” for professional indemnity and directors & officers classes, especially for high-quality risks. Meanwhile, major markets were observed to have reduced their maximum lines from $10 million to $5 million for cyber, with rates for corporate risks increasing up to 80% as insurers focus on ransomware controls and vendor support services quality before providing cover.
“Working closely with a broker to demonstrate the strengths in your risk profile will help to achieve a more favourable outcome in the current market conditions,” said Clark.
Chita Sharma, team leader at BRIC Builders, made note of how Australia’s housing pipeline had continued to taper off through Q1, with new dwelling approvals below last year’s Q1 numbers.
“Builders will continue to be challenged by rising costs, and a shortage of materials and labour,” said Sharma. “Insolvency and industry analysts believe small and medium-sized businesses will be most vulnerable in the coming year.”
Wayne Thompson, client manager at Private Client Group, said insurers this past quarter continued to correct rating structures for products that have historically been competitively priced, “especially landlords, mid-market home insurance, farm, and motor insurances.” Moreover, insurers were seen taking “a more conservative approach” to risks due to the large volume of claims from flood, storm, and fire events that happened over the past few years.
“Risk management is an essential part of keeping insurance claims and premiums to a minimum,” said Thompson. “Clients may consider absorbing smaller losses/claims to make their individual claims history more appealing to insurers and choose to reserve insurance policies for larger losses. We expect insurers will continue to monitor claims risk factors such as floods and fires in high-risk geographies and apply rate corrections appropriate to the level of risk.”
Honan published its market update for Q4 2022 last July, covering developments in corporate, strata and real estate, financial lines, and employee benefits.
