Australian commercial insurance prices are expected to decline further this year after sharp falls in the December quarter, according to global brokers Marsh Risk and Aon.

Marsh’s latest Global Insurance Market Index shows Pacific region rates fell 12% in the last three months of last year – the steepest drop since reductions started to emerge at the beginning of 2024.

The Australia-led Pacific market produced the largest drop among eight regions tracked by the Marsh index.

“With domiciled insurers looking to grow and expand their existing portfolios at the same time as global markets are seeking to write more business, we expect the trend to continue in 2026 across the board, subject to any unforeseen circumstances or widespread large catastrophe losses impacting multiple regions,” Marsh head of global placement for the Pacific Maurice Gatto said.

He told insuranceNEWS.com.au strong insurer results and more favourable reinsurance conditions have led to increased appetite and capacity, which is continuing to drive competition across classes. 

Pacific property rates fell 14% after a similar drop in the third quarter, recording the largest decline globally, Marsh says. Distressed sectors with historically high rate rises and capacity limitations notched some of the largest rate reductions.

“While capacity, pricing and coverage for clients with significant natural catastrophe exposures will continue to be challenged using traditional methods, program design and alternate structures can help insulate programs and make them more resilient long-term,” Mr Gatto said.

Aon’s fourth-quarter pricing update shows Pacific commercial rates dropped by up to 20%.

It says new Lloyd’s insurance providers and increased risk appetite among established carriers have lifted capacity.

“Pricing for most major lines of business is favourable, driven largely by abundant capacity, the absence of large losses and strong insurer performance in underwriting and investment returns.”