2020 will be tough for businesses seeking insurance cover
Expect this year to be another challenging year for businesses seeking insurance cover as top line premium growth becomes a lower priority as the market focuses on improved bottom line underwriting probability.
This is according to Honan’s 2019 Quarterly Market Update, which said the insurance market was trying to restore probability after years of significant losses.
Travis Wendt, Honan’s head of broking and carrier management, said underwriters continued to be risk selective on renewals and new business.
“We have witnessed a number of instances where the incumbent insurer has elected not to renew cover due to changes to underwriting guidelines – even in long standing client/insurer relationships,” Wendt said.
In 2020, it was expected insurers would apply stringent underwriting principles set by management guidelines and would include pricing adequacy, restrictions on certain aspects of coverage and increased excesses.
Bushfires would impact insurer confidence, as well as the potential impact of other natural disasters, including tropical storms and cyclones in Northern Queensland.
“Prior to the arrival of summer and the current devasting bushfire disaster across multiple states, insurers had placed embargoes on new business within regional areas of New South Wales,” Wendt said.
“There’s no doubt that as a result of the bushfires there will be a further drag on premiums and cover.”
High hazard property, professional indemnity, natural catastrophe risks and residential strata risks with aluminium composite panel construction would remain a challenge as the availability of insurer capacity continued to diminish.
“For local insurers, 2019 saw the third full 12-month cycle of underwriting remediation, with no real signs of this altering in 2020,” Wendt said.
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