Australian pricing fell 11%-20% in the first quarter amid abundant capacity and broader coverage, while the Middle East conflict adds uncertainty to the global outlook, according to an Aon report.

The local market was soft in casualty, property, cyber, and directors and officers, but moderate in motor.

“The Australian insurance market continues to soften as insurers generate solid profits and return on equity against the backdrop of benign natural catastrophe activity and sound investment returns,” chief broking officer for general lines in Australia Matt Langham said.

International insurers are keen to expand their Australian footprints and, absent material losses, buying dynamics are expected to be favourable through the half.

Property declined 11%-20% in the quarter, with competition strong for large corporate risks, and Aon says total gross written premium is falling for the first time in a decade despite underlying exposure growth.

Other lines fell by up to 10%, except for motor, which rose 1%-10% due to caution about inflation, labour shortages and overseas parts delays.

Related article: Australian rates slide maintains pace

Aon says casualty remains soft despite loss performance deterioration, as new Australian and London market entrants “compete aggressively” with established insurers. Challenging conditions persist in pockets, including placements with large US exposures.

Cyber capacity remains abundant as soft conditions continue despite recent large losses in the UK and a general uptick in claims frequency.

D&O has fallen for four years, but challenges are emerging around climate disclosures, cyber, governance and artificial intelligence.

“While securities class action filings in Australia have moderated over the last two years, a number of matters currently before the courts may resolve some of the uncertainty that has been tempering claims activity,” Aon said.

New Zealand prices fell 1%-10%, with carriers from overseas, notably the London market, creating competitive pressure, especially for well-performing risks.

Property fell 11%-20%, but underwriters remain cautious of large natural catastrophe and flood exposures. The market declined 1%-10% in other classes.

Globally, Aon says strong insurer profitability and supportive reinsurance renewals are key market drivers, but it warns the Middle East conflict is affecting areas including marine, aviation, cyber, political violence, trade credit, property and financial lines.

“Rising geopolitical volatility is exposing how quickly assumptions around coverage, capacity and balance sheet protection can break down,” risk capital CEO Joe Peiser said. “Conflicts, supply chain disruption and sanctions exposure are testing policy language, capacity and claims assumptions simultaneously.”

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