Finity reports moderate gains in commercial lines following a five-year hard market

Finity notes that commercial lines are still experiencing rate increases after five years of double-digit premium growth, although there is some moderation observed in certain segments of the market.

Susie Amos, Principal at Finity, recently hosted a seminar where the firm’s insurance experts discussed the industry. Amos stated that the profitability of commercial lines has improved as a result of rate gains, which has prompted some areas of the market to see additional capacity.

“In recent years, there has been a notable surge in premium rates, making it increasingly appealing for capital to re-enter the market,” she shares with

“We have witnessed a substantial increase in re-entry and expansion, especially in sectors that have experienced significant rate hikes or those recognized for their higher profit margins,” she explains.

There has been a notable moderation in financial lines, specifically in directors’ and officers’ coverage. Certain policyholders have observed rate reductions, and there is now greater availability of capacity for large listed companies, despite them potentially still experiencing premium gains.

According to Finity, the property and motor insurance sectors, which have witnessed claim cost increases in the double digits in recent years, are expected to experience a gradual easing of inflationary pressures.

However, this process is projected to take a couple of years. Additionally, the escalating costs of reinsurance pose a challenge for the commercial property segment.

Insurers have faced challenges in reserving for liability claims, particularly related to historic abuse, work injuries, and psychological claims.

To address these difficulties, insurers have adopted various measures, including increased reserves, higher premiums, and raised deductibles specifically for work injury cases.

While the majority of insurance clients can still obtain liability insurance, albeit at a higher cost, certain specialized sectors, such as organizations offering services to children, have faced difficulties in finding available coverage.

Ms. Amos explains that the frequency of work-related injury liability claims and the delayed emergence of such claims have played a role in the reinforcement of reserves and rate hikes. Insurers are carefully assessing potential exposures as part of their review process.

“She explained that insurers have altered their perspective on profitability regarding emerging risks, leading to the need for adjustments that account for the substantial level of worker injury or worker-to-worker exposure,” she clarified.

During the seminar, Estelle Pearson, a Principal at Finity, highlighted the Medibank and Optus data breaches from the previous year as examples of the substantial business interruption, financial expenses, and reputational damage that can result from a cyber event.

However, according to Ms. Pearson, following a phase of significant premium hikes and stricter risk assessment, increased capital investment in the Australian market has led to a moderation in premium increases, even in the aftermath of major cyber breaches.



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By Ryan

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