Financial services licensees
Professional indemnity rates for new wholesale fund and asset managers have reduced to 2016 levels. Investment strategies into equities, property (excluding development) and venture capital are most attractive for insurers.
Reductions of 5 to 10 per cent are being offered, however, we’re cautious on the extent to which premiums have ‘bottomed out’.
Together with incoming legislation, regulation and ASICs vow to prosecute more actions in 2025, we expect premiums will stabilise over the next 4 to 6 months.
Broadening capacity from both Lloyds and local markets continue to put downward pressure on rates across the sector.
There is renewed appetite for funds with retail investors however capacity remains limited.
Underlying investments in agricultural assets, carbon, sustainability and mortgage or development assets have limited appetite. Investments in CBD office assets continue to be closely monitored, noting the reduction in rental values affecting office holdings. Vacancy rates in Melbourne CBD are at their highest level since 1995 however return to work mandates indicate improving conditions. Insurers are querying valuation methodologies and assessing assets by geographical location.
Investments into direct property, equities and private equity/venture capital are favoured on the proviso proposers can illustrate appropriate risk management and due diligence processes. However, Insurers will be cautious as to ASICs 2025 enforcement priorities targeting managed property investment schemes.
Licensees for hire remain subjected to very limited capacity from the market, particularly where their corporate authorised representatives have varying types of underlying assets or have retail authorisations. Licensees must illustrate (with supporting information) they have strict protocols in place for the oversight of Corporate Authorised Representatives (CARs) as this is a prerequisite for insurers when considering offering terms.
Financial planners are seeing new entrants re-enter the market resulting in better rates and access to broader cover. A greater focus on compliance, standards and education have improved the risk profile of the industry. For planners operating under their own AFSL there is wider interest.
Information technology and software-as-a-service providers
There is broad interest from insurers for information technology and software-as-a-service in a B2B environment where cover options remain stable with wide appetite and broad coverage available. Appetite for US exposure (where turnover exceeds 25 per cent of total) remains limited.
Appetite constrains significantly where managed services are being provided. It is critical that where managed services are provided, these services are considered in detail to identify real risks presented by that work to ensure appropriate coverage is effected.
FinTech businesses operating in higher risk sectors such as credit card lending, unsecured personal loans, short-term business overdrafts and lines of credit and startup business funding have limited insurer interest.
Cyber preparedness remains an ongoing concern for insurers especially those businesses holding confidential and medical information.
Real estate and property professionals
There is broad appetite for real estate professionals. Insurers remain cautious about strata managers, residential property managers and those with a high percentage of allocations of off the plan apartment sales.
Property managers with positive contract risk management including the use of software to monitor and, where necessary, notify landlords following inspections, urgent repairs and incidents have access to better rates and more markets.
Appetite for valuers remains limited.
Insurers are monitoring proposers by closely assessing geography, asset type and loss history following the recent flux in the interest rate environment.
Accountants
Rates have stabilised but discounts of 5 to 15 per cent are available for firms with good claims histories and strong internal risk management procedures.
For firms that work with publicly listed clients, undertake a high proportion of audit services, complete business valuations, or provide research and development taxation advice, there is limited insurer appetite.
Solicitors
Premiums have stabilised on top-up placements.
Insurers
Significant capacity is available in the market above $30M and rate reductions of 10 to 15 per cent are available. The introduction of ABC insurance as a new primary market remains pending. Should ABC enter the market before the 30 June renewal period this will have a material impact in NSW as an alternative to Lawcover.
Get in touch with your Bellrock Advisor to review your professional indemnity coverage and market opportunities.
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