Insurance Market Mid-Year Update 2014
Soft market dynamics continue to be driven by an abundance of capacity in the (re)insurance market while competition among direct insurers has become more pronounced. Reinsurance treaty pricing for most lines of business continued to decline in the June/July renewal period as excess capital chased reduced demand.
In addition to sustained competition around pricing, there has also been a broadening in policy coverages. Insurers are offering multi-year agreements and, as is typical in soft market cycles, multi-line packaged deals have been negotiated.
While the current market dynamics remain in favour of the insurance buyer, the Australian market remains buoyant. This was evidenced in a recent announcement by the Australian Prudential Regulation Authority of a A$4.7 billion profit for (re)insurers and improved capital/coverage ratios in the 12-month period to March 2014.