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Where business premiums are trending
Nothing worries small businesses as much as cost blowouts, and for the past few years owners have had to juggle with surging premiums while ensuring they don’t compromise on critical – and sometimes even mandatory – insurance coverage.
The past couple of years have been dominated by the pandemic, which has affected us all in some way. In the background economic conditions, workplace challenges and the spectre of inflation have been reacting to all that change. So here is some news on what’s happening in the local insurance market as 2022 kicks into gear.
First, the pace at which premiums have been going up over the past few years is slowing. This should bring some relief to SMEs whose insurance budgets are probably already stretched to the limit.
The latest commercial rate surveys confirm earlier assessments that the Australian market is cooling down. Prices are not rising as quickly as they have been over the last couple of years, and the Australian market is no longer outpacing the rest of the world.
But here’s the not so good news. Industry leaders don’t expect a return to the good old days of what is known as “soft pricing”. The reasons? The world has changed. Insurers need to price properly to cover for the rising costs of claims, a more volatile climate and other changing risk exposures.
Some believe it’s time to stop referring to a “hard market” – what we’ve been through for the past couple of years – and start accepting this is the “new normal” when it comes to the insurance price cycle.
To sum it up, prices aren’t going up as fast as previously, but they’re not about to come down much, either.
However, with easing of pressures come opportunities to “fine-tune” different classes of insurance and a greater willingness to consider what are referred to commonly as “hard to place” risks. That will be some consolation to businesses like meatworks and sawmills, for example.
Meanwhile, businesses that are considered low-risk will be able to access much better deals than those with significant loss history or those in catastrophe-prone regions. Then there’s tricky lines like cyber insurance, where premiums are still rocketing up due to the rising number of attacks and a resultant steep rise in claims.
We know that’s not probably the news you want to hear. But as your broker we want to help you adjust to the “new normal” as quickly as possible, while making sure we can arrange for you the best cover at the best possible price. So talk to us and we’ll get on it straight away.