Marsh has predicted that 2015 will be a year of “greater competition” as more capacity comes to the Australian and Asia-Pacific insurance markets.
The
Pacific Insurance Market Report 2015 highlighted some of the changes Marsh expects to see in the Australian insurance market in 2015 and it appears that the soft market will continue across many lines of business.
“Looking ahead to 2015, it is hard to see any reason for change and the current competitive nature of the market can be expected to continue, while reinsurance pricing is likely to further decrease as additional capacity enters the market in early 2015,” the report notes.
“Those clients who have maintained a focus on risk management and capital/operational improvements will continue to receive the best terms and conditions from the market. With most accounts achieving such significant reductions in 2014, it remains to be seen if these will be possible on the same scale in 2015, and whether premium pool considerations will have an impact on insurers’ underwriting decisions.
“As ever, a well-structured and executed strategy, in combination with current and detailed renewal information, is crucial in achieving the best results in the renewal process.”
The Marsh report also highlights some burgeoning areas of insurance that the market should look to in 2015 and, it will come as no surprise, cyber risk warrants a mention.
“Following a number of very public cyber and security breaches locally and overseas, many financial institution providers and service companies are taking advantage of increases in local and global capacity in cyber and network security products at exceptionally favourable terms.”
The report also looked at professional indemnity as an area that “could potentially experience rate increases".
“In cases where insurers are unable to obtain rate increases in their financial institution’s professional indemnity portfolios, they are alternatively seeking increased deductibles and/or tighter control on the limits and capacity provided on each risk. For these risks, we are not seeing the same level of premium adjustment by insurers as seen in previous years."
The directors and offices (D&O) liability market “continues to improve with cautious optimism,” according to the report and can be seen as a battleground between insurers over the coming year.
“Class action lawsuits are still an issue, and several high-profile cases are affecting insurer’s profitability. Despite these losses and some economic uncertainty, insurers are still competing aggressively for new business. As a result, the 2015 outlook for insurance buyers is positive."
