Your guide to the insurance market and how it affects your business.
Evolving insurance market
The increasingly favourable business insurance market conditions that emerged in the second half of 2023 continued throughout 2024 with prices moderating for several key commercial insurance lines.
After a number of years of significant premium rises and challenging conditions, the slight softening of the market brought a welcome reprieve for many clients. However, the market remained challenging in specific areas and for some clients, particularly liability risks with heavy US exposures and natural catastrophe (NatCat) exposed property risks.
In general, confidence in the insurance market has continued to grow throughout 2024.
Australian insurers responded to increased interest in the local market from London and Singapore in 2023 by re-entering the marketplace in 2024. The added competition saw the return of capacity for clients with quality risks and better pricing for hard-to-place risks. Increased capacity across the market also led to more stable pricing in most insurance classes. Consequently, there was renewed confidence among insurance buyers in both coverage and pricing.
With broader coverage options becoming available throughout 2024, clients enjoyed greater choice and renewed control over risk placement and how they structured risk. With more options, clients have been able to build insurance programs to suit their risk, including in the way the program is structured and in accessing alternative risk management solutions.
Increased stability and more competition led to a levelling out of premiums in most commercial lines with rates further stabilising and increases continuing to slow.
However, the improving market conditions were influenced by the volatility of wider pressures including:
- inflation (core and social)
- interest rate movements
- capital market volatility
- economic growth (slowing locally and internationally)
- supply chain disruptions
- labour shortages, including specialist skills in some areas
- extreme weather events (global NatCat insured losses in the first half of 2024 was around US$60 billion, according to Swiss Re)
- reinsurance costs (in particular for property)
- highly challenging claims environment
- increasing frequency and severity of cyberattacks
- ESG concerns including issues around ‘greenwashing’, ‘greenhushing’ and ‘social washing’
- tightening regulatory landscape
- emerging risks from the rapid adoption of artificial intelligence (AI), and
- geopolitical issues (including major elections in 40 countries) and conflicts (including the war in Ukraine and Israel–Hamas war).
It is expected these factors will continue to impact the insurance market throughout the remainder of 2024 and into 2025. Notwithstanding any major upset, there is cause for cautious confidence that conditions will continue to improve for many clients with further rate stability and increased coverage options.
Download the latest EBM Market Summary here.
