In recent months the commercial property insurance landscape has seen insurers recalibrate their offerings and engagement strategies in response to shifting market dynamics, particularly the softening market. Brokers report seeing greater flexibility from insurers but heightened scrutiny of their submissions.
Since the June 30 renewals, some insurers have shifted in their approach to commercial property insurance, introducing changes that reflect the softening market and, from international players, a renewed appetite for Australian risks.
“We have seen slightly more flexible pricing from some insurers and had more approaches from the London markets who are a bit more willing now to do Australian commercial property business, which is great,” said Melissa Jolly, managing director of Pinnacle Insurance Brokers.
This renewed interest from London is a welcome development for brokers and clients who have faced years of tightening capacity and rising premiums. However, with this increased willingness comes a new level of diligence.
“There has also been greater scrutiny from these insurers on property data, especially things like construction details, occupancy types and catastrophe exposures,” said Perth based Jolly.
Insurers are seeking granular detail to better assess and price risk. This means that brokers must be thorough in gathering and presenting client information. The tightening of underwriting standards is also evident in changes to deductible structures.
“There are also some insurers who are adjusting deductible structures so that they have that extra level of comfort, but they are also requiring stronger risk management evidence,” she said.
For clients, this means demonstrating robust risk management practices is not just a value-add – it’s increasingly a prerequisite for securing favourable terms. The insurer expectations are placing new demands on brokers during the submissions process.
“As brokers, we need to make sure that our submissions are complete and accurate with as much information from clients as possible, including details of any mitigation so we are presenting the right details to the market and then getting the best terms,” said Jolly. Incomplete or vague submissions risk being sidelined in favour of those that provide a clear, comprehensive picture of the risk.
Another broker said these changes are now setting the tone and determining the substance of how insurers and brokers currently interact. “I’m finding that those signs of the market softening are now being reinforced by insurers and getting embedded in their conversations that the market has changed,” she said.
Another change is the way insurers are positioning themselves as partners rather than just providers. “Insurers are also talking a lot more about what can they do to partner with our clients and whilst they still have those very rigorous insurance processes, the conversation has shifted more to how they can do that,” the second broker said.
However, she said the increased activity in the market is creating new operational challenges for brokers. “I think brokers really need to be careful that they don't underestimate the amount of time that they need to complete the renewal process,” said the broker.
With more insurers willing to quote and more remarketing activity taking place, she said the submission process has become more time-consuming, not less.
“I think brokers really need to be careful that they're planning well in advance because with the soft market, there is so much remarketing activity going on that insurers are really busy,” she said. “Just because you might achieve fantastic terms for your clients, that process, in terms of the time it's going take might not necessarily shorten so be well prepared in advance and give yourself plenty of time to get things across the line.”
Despite the softening insurance market there are still major cost and affordability issues facing many clients.
“Even though the market is softening - which is great from a broker and client perspective - people's ability to pay the premiums has become more challenging because businesses are experiencing more expenses,” said Jolly.
Rising costs across the board, from utilities to wages, are putting pressure on clients’ ability to afford even reduced premiums.
“Those increased expenses can be caused by things like utilities costs, increased wages or additional staff,” she said. “One big challenge is navigating the ongoing affordability pressures of our clients.”
This means that brokers must strike a delicate balance between securing lower premiums and maintaining adequate coverage.
“So even though the market is providing lower premiums, we need to juggle that affordable premium with still securing adequate, or ideally, comprehensive cover because we don't want to be cutting certain limits or sums insured to get the premiums down,” said Jolly. The goal, she emphasised, is to maintain high-quality, comprehensive coverage at a price that clients can manage.
“We also need to be aware of and manage insurer appetite shifts,” she said. “Some of them are jumping into newer risks which is great and as brokers we can encourage that so they do start writing this more challenging business again,”
As insurers broaden their appetite and explore new risk categories, said Jolly, brokers have an opportunity to advocate for clients with unique or complex exposures.
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