Business Insurance Market Conditions Report — 2023 Outlook

The Gallagher Business Insurance Market Conditions Report — 2023 Outlook provides expert insights into market conditions across the key business insurance classes, the factors affecting the availability of insurance in Australia, emerging trends to be aware and the strategies that can be used by mid-sized to large organisations to find opportunities among these challenges.

While conditions have begun to stabilise, the insurance market remains somewhat challenging overall. It is expected that premium rates will continue to rise, however, at a much slower rate, in most lines into 2023, where premium rates remain more highly varied by business size, sector, cyber security maturity and risk vulnerability.

Inside the report

Property insurance

While premium increases are stabilising for most property risks, insurers are increasingly focused on the potential for losses related to natural catastrophes.

Key trends

• Premiums are still increasing but the magnitude of increases is reducing
• Natural catastrophe exposed and high-risk property types remain difficult
• Insurers are concerned about the impact of additional flooding
• Businesses are looking at alternatives like captives, protected cell companies and parametric covers.

Updated valuations essential

Rising inflation is also playing a role in property insurance placement, with insurers requesting updated building valuations to ensure that sums insured are adequate as the cost of property rebuild or repair work is blowing out in some cases, affecting claims ratios.

Liability insurance

Conditions in liability markets have eased considerably, with pricing for good risks recording only moderate increases in line with inflationary pressures.

Key trends

• Premiums for good risks are recording only moderate increases
• Loss-affected and higher hazard liability risks remain difficult
• Top-up cover continues to come at an increased price, as insurers set minimum premiums
• Social inflation is affecting long-tail claims costs.

Professional and financial lines

After the recent period of recent premium increases the market is beginning to favour businesses instead of insurers, provided they can demonstrate effective risk management.

Key trends

• Premiums price increases are levelling out
• Insurer appetite is returning to the market
• Challenging risks can still be hard to place
• Excellent corporate governance and risk management are key.

Cyber

Along with increased cyber insurance capacity for Australian businesses there are also encouraging signs that the steep price increases of recent years are levelling out.

Key trends

• Dramatic premium increases are easing as new capacity enters the market
• Cyber is now considered a key part of enterprise risk management at board level
• Having best practice corporate governance and a good story to tell are key
• Data retention and destruction is the subject of sharp focus

Workers' compensation

Premiums are expected to continue increasing, emphasising the value of a strong broker advocate to sell your risk management story to secure premium relief, at moderate rates, and with Workers' compensation premiums typically a high proportion of the insurance cost a business incurs, attention to workplace risk trends to avoid further premium impact is key

Key trends

• Premiums are increasing
• Insurers are less willing to underwrite sub-standard risks to win market share
• Mental health claims are beginning to have a material impact on the market
• Now is the time to address psychological health hazards in the workplace