Business Insurance Price Rises Showing Signs of Slowdown
Business Insurance Price Rises Showing Signs of Slowdown
8
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Rates across the majority of commercial lines are still experiencing increases, but the pace of the rise is starting to weaken, according to a recent webinar by actuarial firm Finity.
The firm suggests that higher rate increases will be more targeted where necessary, while the majority of risks can expect more moderate rate adjustments in the upcoming financial year FY24.
Despite this slowdown, financial lines stand out as an exception, with prices projected to remain stagnant or even decline. This trend has continued over the past six months and marks a departure from the previous years of ever-increasing rates. Finity attributes this shift to increased competition in directors’ and officers’ insurance, which has even led to rate reductions and signals a transition from a hard market cycle to a soft market cycle.
The recent Finity webinar concludes the release of Optima, the firm's annual report on the state of the general insurance industry, ongoing challenges, and emerging trends. Commercial lines' gross written premium (GWP) experienced double-digit growth for the fifth consecutive year in FY23, bringing the estimated GWP pool to over $27 billion-nearly double what it was in FY17.
Factors Driving Increased GWP
Finity attributes the significant increase in GWP to strong rate increases during the hard market phase, as well as the influx of capacity from overseas in certain segments. This increased competition has not only provided market players with more options but has also supported overall top-line growth. However, signs indicate that the hardening market is tapering off.
The Finity webinar also highlighted the impact of technology transformation on distribution trends within the insurance industry. The shift towards digital platforms has created new opportunities for efficiency and value, although at a higher cost. Maintaining or expanding profitability remains a crucial consideration for industry participants. Additionally, technology has enabled brokers to enhance their services by delivering better knowledge and insights to clients, making it a key enabler for the broker channel.
Published:Tuesday, 5th Dec 2023 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
In a significant development for Australia's banking sector, Nuno Matos, Chief Executive Officer of ANZ Group, has been appointed as the new chair of the Australian Banking Association (ABA) council. This appointment marks a pivotal moment for the industry, as Matos brings a wealth of experience and a fresh perspective to the role. - read more
In a proactive move to address potential risks in the housing market, the Australian Prudential Regulation Authority (APRA) has announced the implementation of a cap on high debt-to-income (DTI) home loans, effective from February 2026. This measure is designed to curb the issuance of loans that could pose systemic risks to the financial system. - read more
Recent analyses indicate that Australian home prices are set to rise by approximately 6.9% in 2026, marking a significant upward revision from previous forecasts. This anticipated growth is attributed to constrained housing supply and a resurgence in buyer demand, following interest rate cuts by the Reserve Bank of Australia (RBA) in 2025. - read more
In recent years, refinancing has emerged as a popular financial strategy for many Australian homeowners. With the housing market's dynamic nature and fluctuating interest rates, more people are considering the benefits of refinancing their home loans. This trend is not surprising, as refinancing can potentially reduce monthly payments, secure lower interest rates, and assist with debt consolidation. - read more
A credit rating is essentially a numerical representation of your financial trustworthiness. It's like a report card for your creditworthiness, where higher scores indicate better financial habits. Lenders and financial institutions scrutinize this score when you apply for credit, serving as a primary factor in approving or denying loan applications. - read more
Debt consolidation is a strategy often utilized by individuals seeking to take control of their financial health. At its core, debt consolidation involves combining multiple debts into a single, more manageable loan, typically with more favorable terms such as a lower interest rate or a longer repayment period. - read more
Knowledgebase
Prepayment Penalty: A fee charged by a lender if a borrower pays off their loan early.
