Financial lines market in state of change
Financial lines underwriters are likely to remain cautious in areas such as directors’ and officers’ (D&O) and construction, while cyber breaches are on the rise and the threats are evolving, Australasian Professional Indemnity Group (APIG) National President Mitchell Spurr says.
“Beyond the pandemic, our industry has changed significantly in the last three years,” Mr Spurr says in an APIG conference program president’s welcome message, released as the event returns after a two-year covid hiatus.
“Summarising our whole financial lines market is fraught with danger. There are different cycles in different product classes, and even within these product classes there are competing dynamics.”
Mr Spurr says even if D&O capacity increases from overseas carriers, it is unlikely that local underwriters will return to the rates of 2015 and 2016 having experienced the pain of class action claims.
“Despite legislative and regulatory reforms, litigation funders and plaintiff law firms continue to bring a substantial number of class actions and underwriters will need to continue to price this risk,” he says.
Loss ratios in the construction professional indemnity market remain elevated, and it will take time for recent state building practices reforms to flow through, claims arising from the Hayne royal commission remain an issue for insurers and cyber events are on the increase and are changing.
“We see many companies are now the victim of double extortion tactics where ransomware and data breaches must be responded to simultaneously,” Mr Spurr says. “Global events such as Russia’s invasion of the Ukraine play a key role, and insurers and regulators now expect more in terms of an organisation’s cyber resilience.”
The APIG conference returns as an in-person event at the Hyatt Regency in Sydney on Thursday September 1.
Sessions will examine headwinds in the global economy, the financial lines market following covid, insurer premium and claims trends and rate adequacy, emerging risks and trends in medical indemnity, managing reputational risk in the digital age, ransomware issues, and resolving funded class actions.
Tickets and more details are available here
