From correction to resilience: making the most of Australia’s evolving insurance landscape
- Written by Ben Rolfe, Head of Commercial Risk Australia, Aon
Australia is benefiting from one of the most favourable insurance market environments seen in years. However, it’s important to recognise that these conditions reflect a pricing correction rather than a fundamental shift in market dynamics. Underlying risks and volatility remain present.
Aon’s Q3 Global Insurance Market Insights Report shows the global market has shifted into a softer phase, and the Pacific region mirrors that trend across nearly every major line. Property and Directors and Officers insurance (D&O) are achieving double-digit premium reductions. Capacity is abundant. Competition is intensifying as established insurers, and new entrants, look to retain business and grow. Businesses that previously battled through difficult renewal seasons now face a very different landscape, and this shift is a rare chance to strengthen risk transfer programs and improve long-term resilience.
Market conditions across Australia remain soft for most major lines. Price reductions continue to flow, underwriting behaviour is becoming more flexible, and coverage is expanding in ways that were not possible during the harder market of recent years. It’s important to note, however, that while pricing is favourable, insurers remain disciplined and are closely monitoring loss activity, inflation, and catastrophe exposures. These favourable conditions may not be sustainable in the long term, and buyers should avoid complacency.
Underwriting flexibility is one of the most noticeable changes for Australian buyers. Local underwriters now have greater autonomy, and this is translating into faster decisions and a growing willingness to write non-core business to support growth targets. More insurers are following lead terms, creating smoother placements and greater consistency for buyers. This flexibility is particularly visible in property and D&O, where insurers are deploying larger limits to offset premium erosion and protect market share.
Despite these positive developments, the market remains fragmented and volatile beneath the surface. Buyers should use analytics and scenario planning to futureproof their programs and not assume continued favourable conditions.
The return of broader coverage in Australia reflects broader global conditions. Local property markets are seeing modest to significant rate reductions for well-managed risks, and insurers are more open to providing enhanced terms for buyers who can demonstrate clear risk management strategies. Non-damage business interruption cover, including communicable disease extensions, is increasingly available again. This development marks an important turning point, given how constrained this coverage became during the pandemic period.
However, insurers continue to scrutinise property risks that carry elevated hazard profiles, loss frequency, and challenging occupancies or natural catastrophe exposures may still face more rigorous underwriting and limited capacity.
Australian businesses are also facing emerging risks that require careful attention. The region has benefited from a benign period of large natural catastrophe events despite a significant spike in weather systems in 2025. Natural catastrophe exposures remain a challenge for capital providers, and insurers continue to scrutinise property risks that carry elevated hazard profiles. Buyers with higher-risk occupancy will achieve better outcomes when they invest in stronger mitigation and demonstrate clear risk controls. Increased deductibles enforced two years ago for Natural Catastrophe continue to protect insurers from the frequency of weather events that have impacted Australia this year; however, this volatility sits largely now with commercial buyers. So far, insurers are holding strong on their discipline relating to deductibles but the question remains as to how long will they hang on in such a competitive market environment.
Loss activity, inflation, and regulatory changes continue to drive uncertainty. Businesses should remain vigilant and invest in resilience, even as they take advantage of current market conditions.
Liability trends are another area of concern as workers’ compensation losses deteriorate due to a sharp rise in worker-to-worker claims. Social dynamics, including greater awareness of mental health, are driving new categories of losses and shifting the claims environment. Regulatory changes and contingency-fee litigation, are making it easier for plaintiffs to file claims, which is increasing both the frequency and the severity of liability losses across Australia. Businesses with large United States (US) exposures face even greater scrutiny because global casualty trends continue to be shaped by US litigation and social inflation risks.
These underlying trends reinforce the need for buyers to focus on long-term risk management and not just short-term pricing gains.
Cyber continues as one of the most buyer-friendly markets in Australia. New entrants are pushing established insurers to sharpen terms and add value. Many businesses are using this environment to expand limits, enhance policy wordings, and build more tailored protection. At the same time, cyber claims are rising in both frequency and sophistication due to evolving ransomware tactics, supply chain vulnerabilities, and the use of artificial intelligence (AI) by threat actors. The interplay between enhanced cyber controls and emerging threat vectors, is driving dynamic underwriting conversations, yet businesses with strong cyber maturity continue to secure the most favourable outcomes.
Innovation is reshaping the market in other ways too. Insurers are investing in technology to accelerate claims processing and improve response times, which is creating a more transparent claims environment and helping insurers differentiate themselves beyond pricing. Businesses that build strong relationships with claims teams, and maintain open communication throughout the policy period, are seeing more positive experiences when a loss occurs.
While today’s market presents a valuable opportunity for Australian businesses to reduce cost, it should be viewed as a window to strengthen insurance programs rather than a guarantee of ongoing favourable conditions. Underlying risks – such as natural catastrophes, inflation, and litigation – remain significant and the market volatility means that current pricing may not persist.
In response, many buyers are reviewing and challenging long-standing program structures, reconsidering limits, and testing whether previous exclusions still make sense. Some are reinvesting premium savings into resilience-focused initiatives or expanded cover following in depth reviews of exposure with current supply chain and other critical changes to business conditions in mind. Others are exploring long-term agreements to lock in favourable pricing and conditions ahead of any future market shift. By taking these steps, businesses can build more robust risk transfer strategies that will stand firm when market conditions inevitably change.
Early engagement remains critical. Businesses that start renewal discussions sooner, provide robust risk management information, and clearly articulate risk improvements, gain stronger negotiating leverage. Insurers are looking for high-quality submissions that evidence strong governance, data accuracy, and ongoing investment in risk management as competition intensifies. This is the moment for businesses to take control of their risk strategy and secure outcomes that will hold firm when the cycle eventually turns.
