The major liability insurance lines in New Zealand are expected to remain stable this year, according to Crombie Lockwood’s latest Insurance Market Outlook report.
Over the past 12 months, the Australian D&O market has stabilised following legislative changes and corrections in D&O underwriting, Crombie Lockwood said. Australian D&O rates continue to rise but have significantly moderated from the 300% increase in 2018-2019. According to the brokerage, this is good news for the New Zealand D&O market, which was reacting to what was happening in Australia.
The New Zealand D&O market remains stable, and insurers are willing to look at writing new business and extending existing policy limits, as the COVID-19 pandemic did not result in the predicted mass insolvencies among New Zealand businesses. Crombie Lockwood expects rate increases for publicly listed companies to be larger than those for private companies, due to the increased responsibilities directors are facing in the regulatory, conduct, and culture areas.
The professional indemnity market is stable due to New Zealand’s strong economic environment including a vibrant residential property market. According to Crombie Lockwood, the market has sufficient capacity with a good number of insurers competing for business. However, economic uncertainty will cause insurers to be more cautious in underwriting PI risks.
Some challenges exist in the construction and financial institutions PI lines, with insurers still remediating their portfolios through a combination of rate increases, capacity reductions, higher excesses, and coverage limitations.
Low exposure to bodily injury claims in New Zealand means that general liability capacity is widely available and pricing is generally competitive, Crombie Lockwood said. While insurers have sought modest premium increases in recent years, this can be mitigated if an insured is able to show that it has effective risk management and a clean claims record.
However, in some industry sectors, insurers are seeking larger premium increases and requiring more comprehensive underwriting information. These include risks that have exposure in the US, either physically or through product exports, the broker report said.
