Your guide to the insurance market and how it affects your business.
State of the insurance market
As the pinch of rising costs – of living and doing business – continues to impact clients, news that insurance pricing for several key commercial lines has continued to moderate and premium increases slow, has been welcomed.
The turbulence experienced in 2022, with rising inflation (reaching a 33-year high of 7.3% in Q3 2022), geopolitical concerns (including the war in the Ukraine and tensions with China) and the largest natural catastrophe losses on record for Australia (topping $7.168 billion), continued to impact the insurance market in 2023.
Despite this, and the hard market for a number of commercial insurance lines, the levelling out and stability of premiums witnessed at the start of 2023 prevailed. Overall, a conservative market environment continued, with insurers remaining committed to adapting their appetite, capacity deployment, coverage language, attachment points and pricing to manage portfolio performance. Conversely, a number of general insurers focussed on targeted growth for lower-hazard and quality risks, and products such as directors’ and officers’ (D&O), and cyber insurance, became easier to place.
In light of the global catastrophe losses experienced (US$130 billion in 2022, US$52 billion in H1 2023), climate change concerns weighed heavily on natural catastrophe (NatCat) underwriters. As a result, NatCat-exposed property risks continued to experience a volatile and challenging market environment.
The local and global insurance market continued to be impacted by factors including:
- insurers facing a higher exposure to natural perils such as floods, bushfires and cyclones
- reinsurance costs increasing exponentially, largely due to increased claims from weather-related catastrophes
- profitability remaining a challenge as a result of increased claims and reinsurance costs
- high inflation – headline and social
- continuing supply chain issues
- changing customer expectations
- greater environmental, social and governance (ESG) requirements
- an increase in cyberattacks
- economic instability and looming recessions in many countries, and
- significant regulatory changes for the general insurance industry in the last few years.
Download the latest EBM Market Summary here.
