Gallagher reveals what factors are driving the hard insurance market in Australia

Alma L. Figueroa

Gallagher reveals what factors are driving the hard insurance market in Australia

With new risks emerging and old challenges persisting this year, business owners and boards across Australia have a lot on their plate as they face rising insurance premiums and unavailability of insurance cover.

In its latest blog, Gallagher identified factors currently contributing to a hard insurance market:

  • Catastrophic natural events and the increasing prevalence of extreme weather events;
  • Large individual fire losses;
  • Lower investment returns for insurance companies;
  • Higher costs from the treaty reinsurance market;
  • Increased litigation from class action activity;
  • Greater regulatory scrutiny of boards and directors;
  • COVID-19 implications; and
  • Environmental accountability pressures.

The global brokerage explained that the factors above force insurers to restructure their risk portfolios around long-term sustainability, focusing on profits, so it is not surprising that insurance premiums rose as tolerance for risk has tightened.

Read more: Gallagher Bassett appoints new chief operating officer for Australia

Gallagher has advised business owners and boards to expect insurance premium increases and be aware of how much premiums could increase – determined by several factors, including location, use, and construction type of their business property. It also advised business owners seeking property insurance to prepare to adjust their policy limits and sub-limits to offset market conditions and split risk capacity across several insurers and insurer rate bases.

For those renewing their business insurance, Gallagher recommended:

  • Building a relationship with an insurance broker;
  • Preparing early to enable the broker to negotiate with potential insurers, presenting the business in the best possible light;
  • Providing detailed business information, including risk management protocols, for insurers that will check the business’s risk control processes, supply chain management, and risk management program; and
  • Being open to doing things differently, including changes to pricing, deductibles, and coverage.

Gallagher’s tips for business owners and boards follow the release of its business insurance and risk market report for the first half of 2022 (H1 2022), which provided insight and considerations on key insurance market issues and trends in Australia and globally.

Next Post

Miami Grand Prix result and updates as Max Verstappen holds off Charles Leclerc after late safety car

Follow live reaction as Max Verstappen held off a late charge from Charles Leclerc to win the inaugural Miami Grand Prix and close the gap to the Ferrari driver at the top of the championship standings. Verstappen looked to be closing on a dominant win after passing both Leclerc and […]