Writing in the report, Sarah Lyons, CEO of Gallagher, said that “a perfect storm in the making” is on the horizon with extreme weather events, heated economic debate and political instability at home and abroad combining to become a concern for both clients and the industry alike.
“There has been active discussion in recent months regarding growing concerns over Australia entering a hard insurance market cycle and what that would mean for clients,” Lyons said. “It has been some years since Australia last faced a similar situation and, depending on who you talk to, it is not a clearcut issue.
“Indeed, we are seeing underwriter scrutiny vary by insurance class during renewal discussions and some spaces where rates have remained relatively flat.”
The latest Market Overview report released by the brokerage notes that there appears to be “no set pattern” on premium increases as market negotiations may become more demanding compared with last year.
“Capacity has shifted and brokers are adopting different placement strategies than in previous years, including tapping into market relationships,” the report states. “That said, we would recommend exercising caution before pressing the panic button. Requesting factual information and the appropriate context for rate increases is critical, ensuring you are across the facts and able to make informed and educated decisions.”
The report notes that harder to place and specialty risks are seeing more pronounced shifts, alongside clients with a poor claims history.
Lyons said that regardless of the viewpoints on where the market stands, for brokers it has “never been more vital or relevant” to fulfil the role of a trusted adviser to their clients.
“Supporting clients in a hard market cycle is not solely about getting the best price, though it will always remain one area of concern,” Lyons continued. “The focus should be on providing the best advice and most effective cover to protect their business from preventable outcomes and insurable risks.”
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A new report from major broker Gallagher suggests that the hardening market is “not a clear cut issue” as a host of factors impact pricing in different markets.