Marsh has released its Australian Mid-Year Insurance Market Update for 2025, noting that the positive market conditions observed in 2024 have continued into the first half of this year (H1 2025).
The report indicates that insurers across general insurance classes have strengthened their financial positions due to improved loss ratios and higher investment returns.
This has spurred both established and new insurers to pursue growth, resulting in increased competition and a wider range of options for insurance buyers.
According to Marsh, property insurance in Australia has experienced some of the steepest premium reductions globally, a trend attributed to a relatively benign period for natural catastrophe (Nat Cat) losses.
While Australia’s Nat Cat claims have been subdued, global insured losses reached an estimated US$80 billion in the first half of 2025, largely from severe weather events in the US.
In the liability sector, insurers have generally shown a broad appetite for new business, except where US exposures are involved.
Coverage for per- and polyfluoroalkyl substances (PFAS) remains under close scrutiny, with underwriting approaches varying across the market.
The financial and professional lines market has remained stable, with pricing continuing to soften.
Despite an increase in claims, particularly in the healthcare sector, the cyber insurance market remains competitive.
Marsh’s Fast Track placement facility has increased its quota share capacity to 10%, up from 7.5%, providing clients with exclusive access to additional capacity at a 2.5% discount. This has contributed to more consistent pricing and coverage for complex placements.
Marsh reported that the Australian property insurance market has become increasingly competitive in 2025.
Insurers seeking portfolio growth, new entrants, and international players have all contributed to a surplus of capacity, putting downward pressure on premiums.
Average property insurance rates decreased by 5% to 15% compared to the previous year, with the Pacific region experiencing a 13% decline in the second quarter of 2025. This outpaced the global average decrease of 7%.
Key factors driving these reductions include a period of low Nat Cat losses, accumulated premium reserves, improved reinsurance terms, and new capacity entering the market.
Marsh noted that coverage terms have become more consistent, with fewer variations in policy wording across placements.
Insurer appetite has broadened, although some high-hazard sectors remain challenging.
Environmental, social, and governance (ESG) underwriting restrictions have also eased, particularly for clients with robust transition plans.
The liability insurance market has continued to shift in favour of buyers, according to Marsh.
Increased capacity and a stabilised appetite for risk have led to more competitive renewal outcomes.
Most accounts have seen flat or reduced premiums, although insureds with adverse claims histories may still encounter increases.
Capacity for high-hazard risks has started to return, and the market’s approach to PFAS exposures has become more varied.
The SME sector has benefited from insurers’ renewed interest in high-frequency risks, and retentions have generally eased.
Marsh observes that claims activity has included a rise in mental anguish claims, with insurers monitoring the cost and duration of claims closely. US exposures remain a concern due to the potential for large verdicts.
Marsh’s update found that financial and professional lines insurance has remained favourable for buyers, with premiums generally declining and coverage expanding.
Directors and officers (D&O) liability insurance for large, listed companies saw average premium reductions of 10% to 20% in the first half of 2025.
Smaller and private companies also benefited, although to a lesser extent.
Insurers have focused on governance and risk management rather than macroeconomic factors.
Coverage enhancements, lower deductibles, and long-term agreements have been used as retention tools.
There has been a noticeable expansion in insurer appetite and capacity, particularly for risks previously considered less attractive.
Professional indemnity insurance premiums have softened, with reductions up to 15%.
Insurers have provided broader coverage and removed restrictive endorsements, especially for industries with complex risk profiles.
Underwriting scrutiny has increased for professions using artificial intelligence and those with potential cyber exposures.
Marsh noted that the cyber insurance market in Australia continues to favour buyers, with capacity exceeding demand and premiums declining by 5% to 15% at renewal.
Insurers have differentiated their offerings through value-added services and broader coverage, while also increasing their focus on artificial intelligence and third-party supply chain risks.
Recent regulatory changes require organisations with annual turnover above $3 million to report ransomware or cyber extortion payments to the Australian Cyber Security Centre within 72 hours.
Ransomware remains a leading source of claims, and insurers are monitoring the evolving threat landscape and claims trends closely.
Environmental liability insurance has seen new entrants and increased competition, leading to premium reductions of 5% to 10%.
Coverage for PFAS remains a complex issue, with insurers adopting a range of approaches.
Claims have increased, particularly those related to pollution incidents and regulatory changes.
Private health insurance premiums rose by an average of 3.7% in April 2025, with out-of-pocket costs also increasing.
Coverage rates have remained stable, and there is a growing expectation for employers to help address healthcare affordability and access.
Accident and health insurance markets have been shaped by changes in work practices, technology, and regulatory requirements.
Corporate travel insurance premiums increased by 10% to 15%, while group personal accident insurance saw increases of 5% to 10%, influenced by claims experience and wage declarations.
Workers’ compensation insurance has faced inflationary pressures and rising claims frequency.
Rate changes have varied by jurisdiction, with some states experiencing increases and others remaining flat.
The excess of loss market remains limited, with coverage changes and premium corrections shaping insurer strategies.
Group life insurance profitability continues to be challenged by rising mental health claims and regulatory changes.
Premiums for long-term benefit policies increased by 15% to 25% in the first half of 2025.
Organisations have responded by adjusting benefit designs and exploring cost-saving measures.
Marsh expects competition and capacity to remain strong throughout the rest of 2025, barring unforeseen catastrophic events.
The report recommends that insurance buyers engage early with insurers, provide detailed risk information, and consider long-term strategies to optimise renewal outcomes.
The current market dynamics present opportunities for buyers to review their programs and secure favourable terms, provided they can demonstrate robust risk management and claims performance.
