The casualty market continues to underwrite on a case-by-case basis. Underwriters are still seeking small rate increases of 5% for low hazard renewal business, however, for more exposed segments, pricing continues to increase in excess of 30% as capacity declines.
KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q4):
With the frequency and severity of catastrophic events increasing in Australia, it’s pleasing to see significant initiatives featured in the Federal Budget. These include the establishment of a flood and cyclone reinsurance scheme backed by a $10 billion Government guarantee, a provision of $3 billion to accommodate additional expenditure in response to the New South Wales and Queensland flood event(s), allocation of funds to review Commonwealth bushfire funding for States and Territories, and an additional $84.5 million over four years for the Future Drought Fund. While these are all welcome inclusions, we did not see the increased relief for hard-to-place insurance areas we had hoped for, nor measures targeting building warranty schemes to cover larger buildings.
Q4 also marks the beginning of treaty reinsurance negotiations for larger Australian insurers, and these discussions will be dominated by the impact of recent flooding events. While we’re yet to know the outcomes of these negotiations, we expect that any changes to insurers’ treaties (pricing, coverage restrictions, or cost of additional retentions) will be passed on to clients most exposed to risk.
ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN OVER THE REMAINDER OF FY22?
Two class actions have been filed in the Federal Court in relation to the COVID-19 pandemic Business Interruption test cases, but these are expected to be deferred whilst the leave to appeal the recent decision is resolved. As always, we’ll keep you posted with any unfolding developments.
Protecting cash flow, guarding against late and/or non-payments from customers, and securing your company’s own creditworthiness is critical to business sustainability. This article looks at two key ways you can limit your liquidity risks: credit reports and trade credit insurance.
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