The insurance landscape in 2025 continues to be shaped by a convergence of global and domestic pressures. Geopolitical instability, regulatory reform, and economic uncertainty are influencing underwriting strategies, claims environments, and capital flows across all major lines of business.

This is a detailed report. An Executive Summary is also available.

Governments and regulators are playing an increasingly active role, particularly as sanctions regimes, energy disruptions, and climate-related risks intensify. These dynamics are having a pronounced impact on sectors with international exposure and complex supply chains, requiring insurers and insureds alike to adapt with agility and foresight.

At the same time, the industry is undergoing rapid transformation driven by technology—most notably, artificial intelligence. Nearly 90% of Australian insurers now deploy generative AI in areas such as claims processing, fraud detection, and customer engagement. While these tools are delivering operational efficiencies and improved service outcomes, they also introduce new challenges around data privacy, algorithmic bias, and regulatory compliance. In response, frameworks developed by the CSIRO and the Insurance Council of Australia are guiding responsible AI adoption to ensure fairness, transparency, and resilience.

AI tools deliver operational efficiencies but also introduce new challenges that will firms will need to solve.

Climate change remains a defining challenge. Australia ranks among the most exposed nations globally to extreme weather losses, with annual damages now exceeding $4.5 billion. Floods, bushfires, and storms are disproportionately impacting vulnerable communities, and underinsurance remains a critical concern—particularly in high-risk flood zones. The insurance sector continues to advocate for stronger government investment in resilience infrastructure and more rigorous planning controls to reduce future exposures.

Economic headwinds are also reshaping the risk landscape. High interest rates, persistent inflation, and subdued growth are contributing to a sharp rise in insolvencies, particularly among SMEs. Over 14,700 companies entered external administration in FY2024–25, with construction, food services, and manufacturing among the hardest hit. This trend is prompting heightened scrutiny of management liability and directors’ and officers’ exposures, especially in distressed sectors.

Despite these challenges, improved loss ratios and stronger investment returns have bolstered the financial position of many insurers. This has triggered a shift in market dynamics, with heightened competition and renewed appetite across several general insurance classes. As a result, clients in select segments are beginning to benefit from stabilising or softening premium trends, particularly where risk quality and claims performance are strong.

Despite market challenges, many insurers have a stronger financial position and renewed appetite across several insurance classes.

Looking ahead, insurers are focused on five strategic imperatives:

1. Enhancing risk and reinsurance strategies;
2. Accelerating digital transformation;
3. Innovating for underserved markets;
4. Embedding climate adaptation into underwriting; and
5. Addressing affordability and access.

For clients, the path forward will require a proactive approach to risk management, data transparency, and strategic engagement with the market. This report explores the key developments across major insurance lines, providing insights to support informed decision-making in a complex and evolving environment.

Systemic challenges

As the Australian insurance market enters a more competitive and stabilised phase, several systemic challenges continue to shape underwriting behaviour, product design, and risk management strategies across all major lines. These issues are not confined to individual sectors—they are influencing the broader insurance ecosystem and require coordinated responses from insurers, brokers, and insureds alike.

Claims Inflation and Rising Loss Costs

Across property, casualty, professional indemnity, and management liability, insurers are contending with escalating claims costs. Legal expenses, rebuilding inflation, and broader liability interpretations are driving up the severity of losses. This trend is particularly pronounced in long-tail lines and sectors exposed to litigation, prompting insurers to reassess pricing models and coverage terms.

Climate Risk and Environmental Exposures

Climate-related losses remain a dominant concern. Australia’s exposure to floods, bushfires, and cyclones continues to impact property and construction portfolios, while environmental liability—especially PFAS contamination—is under close scrutiny in casualty and specialty lines. Insurers are rewarding proactive mitigation but remain cautious in catastrophe-prone regions and industries with environmental sensitivities.

Cyber Threats and Technology-Driven Risk

Cybercrime is now a material exposure across multiple lines. Ransomware, business email compromise, and supply chain breaches are driving claims in cyber, management liability, and professional indemnity. AI-assisted fraud is emerging as a new threat, prompting insurers to introduce specific exclusions and reassess investigative protocols. Organisations must demonstrate robust cyber hygiene and governance to secure favourable terms.

Regulatory Oversight and Compliance Pressure

Regulatory scrutiny from APRA, ASIC, and other bodies is intensifying. The Cyber Security Bill 2024 is reshaping compliance expectations, while workers compensation schemes are evolving with new return-to-work obligations and psychological injury reforms. Across all lines, insurers are responding with more disciplined underwriting and increased focus on governance, affordability, and consumer outcomes.

Underinsurance and Valuation Accuracy

Underinsurance remains a persistent issue, particularly in property, construction, and workers compensation. Rising rebuild costs and wage inflation are prompting insurers to demand updated valuations and accurate declarations. Failure to maintain current data can lead to coverage disputes and reduced claims settlements, making valuation discipline a critical component of risk management.

Worker-to-Worker and Employment Practices Liability

Worker-to-worker claims continue to impact underwriting in casualty, construction, and labour-hire sectors. Meanwhile, Employment Practices Liability (EPL) claims are rising in management liability, driven by cultural shifts, evolving workplace norms, and increased employee awareness. These exposures are prompting insurers to tighten terms and apply more selective underwriting.

Market Segmentation and Selective Underwriting

Despite broader market softening, insurers are segmenting risks more aggressively. High-risk sectors—such as construction, labour-hire, and environmental—face tighter terms and elevated deductibles, while well-managed risks are rewarded with broader coverage and premium relief. Specialty lines continue to face capacity constraints, reinforcing the need for strategic placement and early engagement.

Property

Summary

The Australian property insurance market has stabilised with expanded insurer appetite and improved reinsurance capacity supporting more competitive outcomes for well-managed corporate risks. Assets with strong risk controls and low catastrophe exposure are attracting favourable terms, while high-risk properties continue to face elevated pricing and stricter conditions.

Premiums for quality commercial risks are trending flat or slightly down, though average rates remain structurally higher than pre-2020 levels due to climate volatility, rebuild cost inflation, and regulatory capital requirements. Insurers are rewarding proactive mitigation measures with improved pricing and coverage.

Looking ahead, the market is expected to remain cautiously competitive through 2025–26, contingent on manageable catastrophe losses. Strategic placement, accurate valuations, and strong risk presentation will be key to securing optimal outcomes, particularly in postcode-sensitive and catastrophe-exposed areas.

Market Overview

The Australian property insurance market has entered a phase of cautious stability following the prolonged hard market cycle that spanned from 2020 to 2023. During that period, insurers responded to heightened catastrophe losses, constrained reinsurance capacity, and inflationary pressures by tightening underwriting criteria, reducing capacity, and significantly increasing premiums. For corporate-sized businesses, this environment created challenges in securing adequate cover at sustainable pricing, particularly for assets with exposure to natural perils or complex risk profiles.

In 2024 and into 2025, the market has shown signs of recalibration.

Expanded insurer appetite, improved reinsurance conditions, and increased competition have contributed to more favourable outcomes for selected risks. While this shift does not represent a return to pre-2020 pricing norms, it does signal a more balanced environment—one in which insurers are willing to engage on terms that reflect risk quality and mitigation efforts. However, affordability challenges remain acute in certain segments, particularly for strata and residential properties located in catastrophe-prone regions. Climate-related losses and elevated rebuilding costs continue to exert upward pressure on premiums, reinforcing the need for strategic risk management and accurate asset valuations.

Insurer Appetite

Insurer appetite for commercial property has broadened, particularly for assets that demonstrate strong governance, robust risk controls, and minimal exposure to flood, cyclone, or bushfire. Corporate portfolios that reflect disciplined maintenance regimes, comprehensive risk mitigation strategies, and transparent claims histories are increasingly attracting competitive terms. This shift is being supported by a more active role played by local underwriting agencies and Lloyd’s syndicates, which are offering alternative capacity and underwriting flexibility that can be leveraged to optimise placement outcomes.

For corporate clients, this means that the quality of risk presentation is more important than ever. Insurers are scrutinising not only the physical attributes of the property but also the operational resilience of the business, including business continuity planning, supply chain dependencies, and environmental risk management. Properties that are well-maintained, regularly inspected, and supported by documented mitigation measures—such as flood barriers, fire suppression systems, and preventative maintenance programs—are being rewarded with improved terms and pricing.

A one-size-fits-all approach is no longer viable. A granular view of each asset’s risk characteristics is essential.

In contrast, appetite remains selective in segments such as strata and high-risk residential property. Underwriters continue to exercise caution around exposures to flood, cyclone, and ageing infrastructure. In these areas, insurers are maintaining stricter terms, elevated deductibles, and narrower coverage scopes. For corporate clients with diversified property holdings, this underscores the importance of segmenting risk profiles and tailoring placement strategies accordingly. A one-size-fits-all approach is no longer viable; instead, brokers and risk managers must adopt a granular view of each asset’s risk characteristics and market positioning.

Capacity and Reinsurance

The 2025 reinsurance renewals marked a significant turning point in capacity availability. A number of global reinsurers have re-entered the Australian market, injecting fresh capacity and exerting downward pressure on reinsurance pricing. This influx has enabled insurers to secure broader protections at more competitive rates, which in turn has supported a modest expansion in underwriting appetite. For corporate insureds, this translates into improved access to cover and, in some cases, premium relief, particularly for assets with favourable risk characteristics.

A number of global reinsurers have re-entered the Australian market, injecting fresh capacity and exerting downward pressure on reinsurance pricing.

Reinsurance remains a critical driver of insurer behaviour in the property segment. The structure and cost of reinsurance programs directly influence the terms offered to insureds, particularly in catastrophe-exposed regions. Stronger reinsurance programs have allowed some insurers to take on more risk, expand their appetite, and offer more competitive pricing to select segments. However, this dynamic is highly sensitive to loss activity. A severe catastrophe season could rapidly tighten conditions, leading to reduced capacity and upward pressure on rates.

Corporate risk managers should remain attuned to reinsurance market developments, as these can have a material impact on placement outcomes. Engaging with brokers who maintain strong relationships with both insurers and reinsurers can provide valuable insight into market sentiment and help shape more effective marketing strategies.

Premium Trends

Premium trends across the commercial property sector reflect the nuanced and segmented nature of the current market. Risks with strong profiles—low catastrophe exposure, comprehensive risk controls, and clean claims histories—are achieving flat to modest premium reductions. This is particularly evident in metropolitan areas and for assets with modern construction standards and minimal environmental exposure. Insurers are actively competing for quality business, and in some cases, are willing to offer multi-year agreements to secure long-term relationships with desirable clients.

Conversely, properties in catastrophe-prone regions or those with recent loss activity continue to face elevated pricing. In these cases, insurers are applying higher deductibles, narrower coverage scopes, and more stringent policy conditions. The cost of cover remains significantly above pre-2020 levels, reflecting the enduring impact of climate risk, regulatory capital requirements, and increased claims severity.

The cost of cover remains significantly above pre-2020 levels, reflecting the enduring impact of key risks.

For corporate portfolios that span multiple geographies and asset types, premium variance can be substantial. Postcode-driven pricing models are becoming more prevalent, particularly in residential and strata segments, where insurers are using granular data to assess exposure and adjust rates accordingly. This trend underscores the importance of accurate asset data and location-specific risk assessments in achieving optimal outcomes.

Key Market Drivers

Several structural drivers continue to shape the property insurance landscape and influence insurer behaviour.

Climate Risk remains a dominant factor. The frequency and severity of extreme weather events—floods, bushfires, cyclones—have increased claims volatility and prompted insurers to reassess their exposure models. This has led to more conservative underwriting, particularly in high-risk regions, and a greater emphasis on mitigation measures.

Rebuilding Costs have escalated due to inflation in labour, materials, and logistics. This has increased the severity of claims and prompted insurers to scrutinise sum insured adequacy. Underinsurance remains a significant concern, and insurers are increasingly requiring updated valuations and evidence of cost assessments to support coverage decisions.

Regulatory Oversight from APRA and ASIC has intensified, with a focus on insurer resilience, affordability, and consumer outcomes. These regulatory pressures are influencing product design, pricing frameworks, and disclosure requirements. For corporate clients, this means greater transparency and accountability in the placement process, as well as increased scrutiny of policy terms and conditions.

Risk Mitigation is being actively rewarded. Insurers are offering improved terms and pricing to clients who invest in proactive measures such as flood-proofing, bushfire protection, and structured maintenance programs. These efforts not only reduce the likelihood and severity of claims but also demonstrate a commitment to long-term risk management, which is increasingly valued by underwriters.

Broker and Insured Considerations

For brokers and insureds, strategic engagement remains critical in navigating the evolving property insurance landscape. Several considerations should guide placement strategy and risk management planning.

Accurate Valuations are essential to avoid underinsurance and to build insurer confidence. Rebuild cost assessments should be updated regularly and supported by independent valuation reports where possible. Insurers are placing greater emphasis on sum insured adequacy, and discrepancies can lead to coverage disputes or reduced claims settlements.

Risk Presentation plays a pivotal role in securing favourable outcomes. Demonstrating maintenance regimes, mitigation measures, and operational resilience can materially improve placement terms. Brokers should work closely with clients to compile comprehensive risk profiles that highlight strengths and address potential concerns.

Marketing Strategy should be aligned with market cycles and insurer appetite. Timing matters—engaging the market during periods of capacity expansion or favourable reinsurance renewals can enhance competitive tension and lead to better outcomes. Multi-year agreements may also be considered for stable risks, providing pricing certainty and relationship continuity.

Affordability Watchpoints remain relevant, particularly in high-risk postcodes. Despite broader market stabilisation, premium pressure will persist in regions exposed to flood, cyclone, or bushfire. Clients in these areas should explore alternative structures, such as layered programs or parametric solutions, to manage cost and coverage.

Outlook

Looking ahead, the property insurance market is expected to remain cautiously competitive through 2025 and into 2026, provided catastrophe losses remain within forecast tolerances. Insurers will continue to segment risks by location, exposure, and risk quality, offering attractive pricing for low-catastrophe, well-maintained properties, while applying stringent terms to higher-risk exposures.

The property insurance market is contingent on catastrophe losses remaining within forecast tolerances.

Reinsurance capacity is currently supportive, but this dynamic is fragile. A severe catastrophe season could rapidly reverse recent gains, leading to tighter conditions and renewed upward pressure on premiums. Corporate insureds should prepare for this possibility by maintaining strong risk management practices, updating valuations, and engaging early in the placement process.

Innovation in data analytics and risk modelling is also expected to play a greater role in underwriting decisions. Insurers are increasingly using geospatial data, climate modelling, and predictive analytics to assess exposure and tailor pricing. For corporate clients, this presents an opportunity to leverage internal data and collaborate with brokers to present a more compelling risk narrative.

Casualty

Summary

The Australian casualty insurance market has stabilised and become increasingly competitive, with insurers actively expanding appetite and growing portfolios. Premiums for general liability are trending down by 5–10%, particularly for insureds with strong safety records and low claims frequency. Appetite has broadened to include high-frequency sectors such as retail and even some high-hazard sectors like faith and community organisations, while construction, labour-hire, and educational exposures remain under close scrutiny.

Capacity is strong, supported by stable reinsurance and less volatility than property lines. Long-tail and environmental exposures still face selective underwriting. Key challenges include rising claims inflation, ESG-related liability, and worker-to-worker claims. Regulatory oversight from APRA and ASIC continues to shape underwriting expectations. Looking ahead to 2026, the market is expected to remain favourable for well-managed risks, though segmentation will persist and volatility may return if litigation trends accelerate.

Market Overview

The Australian casualty insurance market has stabilised and entered a competitive phase, with insurers actively growing portfolios and expanding appetite across a broader range of sectors. While structural pressures such as claims inflation, litigation intensity, and long-tail exposures remain present, the overall environment has improved—particularly for general liability. Insurers are demonstrating greater flexibility, and many are re-engaging with sectors previously considered high-risk, albeit with measured caution.

Insurers are actively growing portfolios across a broader range of sectors.

This shift is being supported by strong capitalisation, stable reinsurance conditions, and a strategic focus on portfolio diversification. As a result, insureds with strong safety records and disciplined risk management are now well-positioned to benefit from improved terms, broader coverage, and more favourable pricing.

Insurer Appetite

Insurer appetite has expanded significantly for standard risks with strong safety and loss histories, including public and product liability and errors and omissions (E&O). High-frequency sectors such as retail are also attracting increased interest, as insurers become more comfortable managing predictable, lower-severity claims. Notably, capacity is returning to high-hazard sectors such as faith-based and community organisations, where insurers are re-entering the market with a more nuanced understanding of risk.

However, caution remains in place for construction, labour-hire, and environmental exposures. Worker-to-worker claims and educational sector risks continue to be closely monitored, with underwriting decisions heavily influenced by claims history, contractual risk transfer, and safety protocols. While capacity is available, it is being deployed selectively, and insureds in these sectors should expect more rigorous underwriting scrutiny.

Capacity and Reinsurance

The casualty market is benefiting from adequate capital across both local and global insurers, which is supporting healthy competition. Reinsurance remains stable, with strong treaty support and less volatility than property lines, given the lower exposure to natural catastrophe events. This has enabled insurers to maintain consistent pricing and expand their appetite across a broader range of risks.

The casualty market is seeing greater capital from both local and global insurers.

That said, specialty lines such as environmental liability, mass tort, and long-tail exposures continue to face capacity constraints. These segments are more reliant on selective reinsurance and are subject to tighter underwriting controls. Insureds operating in these areas should be prepared to provide detailed risk information and consider alternative program structures to secure adequate cover.

Premium Trends

Premiums for general liability are trending downward, with reductions of 5% to 10% common for insureds with favourable risk profiles. This is being driven by increased competition, insurer growth strategies, and a return to more balanced underwriting. In many cases, broader coverage terms and reduced deductibles are also being offered, particularly for clients with strong controls and clean claims histories.

However, high-hazard and long-tail exposures remain subject to upward pricing pressure or restrictive terms. Construction and labour-hire sectors, in particular, continue to attract elevated deductibles and narrower coverage scopes, reflecting the ongoing concern around worker-to-worker claims and contractual liability.

Market Trends

Several positive trends are emerging across the casualty market. Long-Term Agreements (LTAs) are making a return, offering insureds pricing stability and relationship continuity. Underwriting restrictions are easing, and insurers are demonstrating greater willingness to engage with risks that were previously considered marginal. Appetite for high-frequency claims is increasing, particularly where loss severity is low and risk controls are demonstrably effective.

These developments are translating into improved terms for many insureds, especially those with strong governance, transparent claims data, and a proactive approach to risk mitigation.

Challenges and Emerging Risks

Despite the improving market conditions, several challenges and emerging risks continue to shape insurer behaviour. Environmental exposures—particularly those involving PFAS and other persistent pollutants—remain under close scrutiny. Cross-sector exposures in high-risk industries, such as construction and education, require careful management and clear contractual delineation of liability.

Environmental exposures, climate-related liability and ESG are growing concerns.

Climate-related liability, ESG exposures, and social inflation—including class actions and litigation funding—are growing concerns. These factors are contributing to increased claims complexity and prompting insurers to reassess aggregate exposures and policy wordings. Worker-to-worker claims continue to impact underwriting caution, particularly in sectors with high subcontractor reliance or limited risk transfer mechanisms.

Regulatory Oversight

Regulatory scrutiny remains a key influence on the casualty market. APRA and ASIC continue to focus on governance, affordability, and risk management practices. Insurers are expected to demonstrate resilience, transparency, and a commitment to fair outcomes for policyholders. This regulatory environment is shaping product design, pricing strategies, and claims handling protocols across the sector.

Strategic Considerations

To navigate the evolving casualty landscape, insureds and brokers should focus on several key strategies:

• Maintain accurate and detailed claims data, particularly for long-tail and worker-to-worker exposures.

• Emphasise safety culture, risk mitigation, and documented procedures to support underwriting submissions.

• Explore competitive opportunities in standard liability lines, where pricing and coverage are improving.

• Manage expectations in high-hazard sectors, where terms may remain tight despite broader market improvements.

Early engagement, transparent risk presentation, and a proactive approach to risk management will be critical to securing optimal outcomes.

Outlook

The outlook for the casualty insurance market in 2026 is cautiously optimistic. Downward pricing trends are expected to continue, particularly for general liability and standard risks. Insureds with strong risk profiles, clean claims histories, and robust controls are well-positioned to benefit from improved terms and broader coverage.

However, market segmentation will persist. High-risk sectors and long-tail exposures will continue to face tighter terms and more selective underwriting. Potential volatility remains if judicial trends shift or class action activity accelerates. As such, disciplined risk management and strategic broker engagement will remain essential in navigating the market and securing sustainable coverage.

Construction

Summary

The Australian construction insurance market has continued to soften into 2025, delivering more favourable outcomes for well-managed risks. Increased capacity and renewed insurer appetite—particularly in contract works and construction liability—have led to stabilised or reduced premiums for claims-free clients. Contract works insurance is seeing rate movements between -5% and +5%, while construction liability renewals for well-performing accounts are achieving reductions of up to 15%. However, deductibles for water damage and subcontractor injuries remain elevated and inconsistently applied, especially in New South Wales and Victoria.

Improved reinsurance conditions have supported this shift, with global reinsurers re-entering the market and enabling broader protections at more competitive terms. Despite these gains, structural pressures such as climate risk, rising rebuild costs, and regulatory scrutiny continue to shape underwriting behaviour. Insureds with strong risk management, accurate valuations, and proactive engagement are best positioned to benefit from the current market dynamics, while those in higher-risk segments should prepare for continued segmentation and tighter terms.

Market Overview

The Australian construction insurance market has continued its softening trajectory into 2025, building on the momentum that began in select lines during 2024. This shift has been welcomed by insureds, particularly in a sector that has faced sustained pricing pressure and capacity constraints in recent years. The return of insurer appetite and increased competition—both domestically and from international markets—has created a more favourable environment for well-performing construction clients. While challenges remain, particularly in relation to water damage deductibles and subcontractor injury exposures, the overall tone of the market is one of cautious optimism.

The construction industry's softening trajectory is a relief for a sector that has faced sustained pricing pressure for several years.

The improved conditions are most evident in the contract works and construction liability segments, where increased capacity and a more balanced underwriting approach are translating into stable or reduced premiums for clients with strong risk profiles. However, the market remains sensitive to loss experience, geographic exposure, and the quality of risk management practices, particularly in high-claim jurisdictions such as New South Wales and Victoria.

Insurer Appetite

Insurer appetite for construction-related risks has broadened, particularly in the contract works and construction all risks (CAR) space. Local and international insurers have demonstrated a renewed willingness to deploy capacity, especially for projects with robust risk management frameworks and clean claims histories. As a result, premium rates for CAR renewals have stabilised, with typical outcomes ranging from a 5% reduction to a 5% increase for claims-free clients. However, deductibles—especially for water damage—remain elevated, reflecting the ongoing concern around the frequency and severity of these losses.

Insurers have shown a willingness to deploy capacity in the industry, subject to clean claims histories.

In the construction liability segment, the market has shown further signs of improvement. Insurers are now more comfortable with their exposure to frequency losses and subcontractor injury claims, leading to a more competitive environment. Capacity has returned across the board, with strong participation from direct insurers, underwriting agencies, and London markets. This increased competition has placed downward pressure on rates, particularly for well-performing accounts. Renewal premiums for claims-free programs are typically ranging from a 15% reduction to a 5% increase. However, the treatment of subcontractor injury deductibles remains inconsistent, with some insurers seeking to increase excesses—particularly for builders operating in New South Wales and Victoria, where claims frequency remains a concern.

Capacity and Reinsurance

The 2025 reinsurance renewals delivered a significant boost to available capacity, with several global reinsurers re-entering the Australian market. This influx has created downward pressure on reinsurance pricing and enabled insurers to secure broader protections at more competitive terms. In turn, this has allowed insurers to expand their appetite in the construction sector and offer more favourable terms to selected risks.

The return of several global reinsurers to the Australian market has created downward pressure on reinsurance pricing.

While reinsurance for construction is less catastrophe-driven than property, the improved treaty support has nonetheless contributed to a more stable underwriting environment. Insurers are now better positioned to manage their aggregate exposures and offer consistent terms across a broader range of project types and values. For insureds, this translates into improved access to cover, more predictable pricing, and greater flexibility in structuring placements.

Premium Trends

Premium trends in the construction sector reflect the broader softening of the market. In the contract works segment, rates have stabilised, with most renewals falling within a narrow band of -5% to +5% for clients with favourable claims experience. This represents a marked improvement from the double-digit increases seen in prior years and reflects the increased competition and capacity in the market.

Construction liability premiums have seen even more pronounced movement, particularly for well-managed risks. Claims-free programs are achieving reductions of up to 15%, with most renewals falling between -15% and +5%. However, pricing remains sensitive to jurisdictional factors, particularly in states with high subcontractor injury frequency. In these cases, insurers are applying higher deductibles or adjusting terms to manage exposure.

Pricing remains sensitive to jurisdictional factors, but reductions of up to 15% are possible for claims-free programmes.

Despite these improvements, average premiums remain structurally higher than pre-2020 levels, reflecting the enduring impact of climate risk, regulatory capital requirements, and inflation in rebuilding costs. Nonetheless, the current environment presents a window of opportunity for insureds to secure more favourable outcomes through strategic engagement and strong risk presentation.

Key Market Drivers

Several factors continue to shape the construction insurance landscape.

Climate Risk remains a key consideration, particularly for projects exposed to flood, bushfire, or severe weather events. While construction insurance is less directly impacted by catastrophe reinsurance pricing, the broader risk environment influences underwriting appetite and pricing decisions.

Rebuilding Costs have continued to rise, driven by inflation in materials, labour shortages, and supply chain disruptions. These pressures have increased the cost of claims and influenced insurers’ expectations around sum insured adequacy and project valuations.

Regulatory Oversight from APRA and ASIC has intensified, with a focus on insurer resilience, affordability, and consumer outcomes. This has led to more disciplined underwriting and greater scrutiny of policy terms, particularly in high-risk sectors such as construction.

Risk Mitigation is being actively rewarded. Insurers are offering improved terms and pricing to clients who can demonstrate proactive risk management, including water damage prevention, subcontractor safety protocols, and robust site supervision. The quality of risk presentation is increasingly a differentiator in securing competitive outcomes.

Broker and Insured Considerations

To capitalise on the current market conditions, insureds and brokers should focus on several key areas.

Accurate Valuations are essential to ensure adequate coverage and avoid underinsurance. Insurers are placing greater emphasis on project cost accuracy and sum insured adequacy, particularly in light of rising construction costs.

Risk Presentation remains critical. Demonstrating strong site controls, subcontractor management, and water damage mitigation can materially improve placement outcomes. Detailed risk submissions and transparent claims histories are essential in differentiating risks in a competitive market.

Marketing Strategy should be aligned with market cycles. With increased competition and capacity, there is an opportunity to test the market and secure improved terms. However, timing is key—early engagement and strategic tendering can enhance competitive tension and deliver better results.

Affordability Watchpoints persist in high-risk jurisdictions. Builders operating in areas with elevated subcontractor injury rates or frequent water damage claims should prepare for continued scrutiny and potentially higher deductibles. Tailored risk management strategies and insurer engagement will be essential in managing these exposures.

Outlook

The construction insurance market is expected to remain cautiously competitive through 2025 and into 2026, provided loss activity remains within forecast tolerances. Insurers will continue to segment risks based on project type, location, and claims history, offering attractive pricing for well-managed, low-risk accounts while maintaining tighter terms for higher-risk exposures.

Reinsurance capacity remains supportive, but the market is not immune to external shocks. A significant loss event or deterioration in claims experience could prompt a recalibration of appetite and pricing. As such, insureds should continue to invest in risk management, maintain accurate valuations, and engage early in the renewal process to maximise their position.

Professional Indemnity

Summary

The Australian Professional Indemnity (PI) market continues to soften, with premiums decreasing by 0–10% across many sectors. Increased competition from new entrants, including Lloyd’s syndicates and local insurers, is driving broader coverage options and improved terms—particularly for financial services, consulting, and technology firms with strong compliance and governance frameworks.

Claims inflation and class actions remain key concerns, especially in financial lines and sectors handling sensitive data. Cyber-related PI claims are rising, prompting insurers to tighten policy language and increase scrutiny of IT and privacy practices. While capacity is recovering across most sectors, underwriting remains selective. Early engagement, documented risk management, and regulatory alignment will be critical to securing optimal outcomes in a market that continues to reward operational maturity and transparency.

Market Overview

The Australian Professional Indemnity (PI) insurance market continues to soften, with improved underwriting appetite, expanded capacity, and competitive pricing across many sectors. This shift reflects a recalibration of insurer strategies following several years of rate hardening and capacity constraints. New entrants (including Lloyd’s syndicates and local insurers) have increased competition, broadening coverage options and creating more favourable conditions for insureds with strong governance and low claims frequency.

While the overall market is softening, select industries remain subject to increased scrutiny.

While the overall market tone is positive, underwriting remains selective. Insurers are differentiating risks based on industry, operational maturity, and regulatory exposure. Sectors such as financial services, consulting, and technology are seeing the most favourable terms, particularly where compliance frameworks and risk controls are well established.

Premium Trends and Insurer Appetite

Premiums have decreased by 0–10%, depending on the insured’s industry, claims history, and governance standards. Organisations with clean records and robust risk management are securing the most competitive outcomes, with some programs achieving multi-year agreements and broader coverage enhancements.

Insurer appetite is strongest in sectors with well-defined professional risk profiles and low exposure to systemic litigation. Financial services, particularly planners operating under their own AFSL, are seeing improved terms and broader coverage. Consulting and technology firms are also benefiting from increased competition, especially where data handling and privacy protocols are well documented.

Insurers have the strongest appetite for companies with low exposure to systemic litigation.

Construction and engineering remain under scrutiny due to legacy claims involving non-compliant products and design liability. However, improving risk profiles and clearer contractual frameworks are attracting better terms, particularly for firms with strong project governance and documented quality assurance processes.

Claims Trends

Claims inflation remains a key concern, driven by rising legal costs and broader interpretations of professional liability. Insurers are closely monitoring defence expenses and settlement values, particularly in sectors exposed to regulatory action or reputational risk.

Class actions continue to impact financial lines, with superannuation, financial advice, and listed entities among the most affected. These exposures are prompting insurers to reassess aggregate limits, apply sub-limits for specific risks, and introduce exclusions where systemic litigation is likely.

Cyber-related PI claims are increasing, particularly where professional services intersect with data handling, privacy breaches, and technology failures. Insurers are responding by tightening policy language, introducing affirmative cyber exclusions, and requiring detailed disclosures around IT infrastructure and data governance.

Outlook

The PI market is expected to remain buyer-friendly through 2025–26, with continued rate softening and expanded capacity. However, insurers may become more selective in deploying capital, particularly in sectors with elevated claims frequency or regulatory exposure.

Risk management and early engagement will be critical to securing optimal terms. Insureds should prepare for underwriting scrutiny around operational risk, accountability frameworks, and regulatory compliance. Those who invest in governance, transparency, and broker collaboration will be best positioned to navigate the evolving landscape and secure sustainable coverage.

Management Liability

Summary

The Australian Management Liability market is stable, supported by strong competition and ample capacity. While packaged policies for SMEs and nonprofits continue to offer favourable terms, rate reductions have slowed due to rising Employment Practices Liability (EPL) and Crime claims. In the Directors and Officers (D&O) space, excess layer pricing remains competitive, though some insurers are reassessing deployment strategies amid profitability concerns.

Claims activity is evolving, with EPL claims increasing due to workplace cultural shifts, and insolvency-related exposures prompting tighter underwriting. Employee dishonesty, social engineering scams, and AI-assisted fraud are driving Crime claims, while cyber-related losses are increasingly addressed under Management Liability policies. As regulatory scrutiny intensifies and AI risks emerge, insurers are refining policy wording and exclusions. The market is expected to remain competitive, but insureds should prepare for more selective underwriting and invest in governance, transparency, and cyber resilience to secure optimal outcomes.

Market Overview

The Australian Management Liability insurance market has remained largely stable through the first half of 2025, supported by strong competition, ample capacity, and favourable pricing. While the broader market tone is positive, insurers are beginning to respond to rising claims activity—particularly in Employment Practices Liability (EPL) and Crime—by moderating rate reductions and reassessing underwriting strategies. The SME and mid-market sectors, especially private and nonprofit organisations, continue to benefit from packaged policy offerings, though pricing momentum has slowed.

In the Directors and Officers (D&O) space, excess layer pricing for publicly listed companies remains more favourable than primary placements, driven by an oversupply of capacity. However, some insurers are reviewing deployment strategies due to profitability concerns, particularly in sectors exposed to insolvency risk and regulatory scrutiny.

Premium Trends and Insurer Appetite

Rate reductions on packaged Management Liability policies have slowed, particularly in the SME and mid-market segments. Insurers are responding to increased EPL and Crime claims by tightening terms and applying more selective underwriting. While competition remains strong, pricing is becoming more nuanced, with greater emphasis on governance, financial resilience, and claims history.

Insurers are responding to increased EPL and Crime claims by being more selective, and pricing is more nuanced as a result.

Claims Trends

Claims activity in Management Liability continues to evolve, with several notable trends shaping insurer behaviour. EPL claims are rising, driven by shifting workplace norms, cultural expectations, and increased employee awareness of rights. These claims are particularly prevalent in sectors undergoing organisational change or facing reputational challenges.

Insolvency-related claims remain a concern, especially in industries exposed to private credit and economic volatility. Insurers are tightening underwriting criteria and reassessing the removal of insolvency exclusions, particularly for companies with weak financials or limited access to capital.

Employee dishonesty and third-party fraud remain the leading causes of Crime claims, with a noticeable increase in social engineering scams and phishing attacks. AI-assisted fraud—such as shallowfake image manipulation—is emerging as a new threat, prompting insurers to update investigative protocols and reconsider coverage boundaries.

Cybercrime-related losses are increasingly being addressed under the Crime sections of Management Liability policies, particularly where standalone cyber cover is limited or excluded. This shift reflects the growing overlap between operational risk, fraud, and digital exposure.

Broker and Insured Considerations

Insureds and brokers should remain vigilant in navigating the evolving Management Liability landscape. AI presents both opportunity and risk, and insurers are increasingly cautious about AI-washing and misleading disclosures, which may trigger regulatory scrutiny and D&O claims. Organisations deploying AI tools should ensure transparency, governance, and compliance with emerging regulatory frameworks.

Insurers are increasingly cautious about AI and misleading disclosures that may trigger D&O claims.

Cyber threats and regulatory developments continue to influence policy wording and exclusions, particularly in D&O and Crime sections. Insureds should review coverage terms carefully and engage early with brokers to address potential gaps or limitations. Documented risk management practices, board oversight, and employee training are critical to securing favourable outcomes.

Outlook

The Management Liability market is expected to remain competitive through 2025–26, though the pace of rate softening may slow as insurers respond to rising claims and regulatory pressures. Underwriting will become more selective, with increased scrutiny of financial resilience, governance structures, and operational risk.

Insureds who invest in transparency, proactive risk management, and strategic broker engagement will be best positioned to secure sustainable coverage. As the risk environment continues to evolve, disciplined preparation and early engagement will be essential to navigating the market effectively.

Cyber Liability

Summary

The Australian cyber insurance market is softening with competitive pricing, expanded capacity, and broader coverage availability. Organisations with strong cyber hygiene—such as multi-factor authentication, endpoint protection, and incident response planning—are securing premium reductions of 5–15%. Increased competition from new entrants and offshore providers is further driving favourable outcomes for well-managed risks.

Despite improved market conditions, the threat landscape remains dynamic. Ransomware continues to dominate claims, while business email compromise and supply chain breaches are rising. Insurers are tightening underwriting for high-risk sectors and introducing AI-related coverage clarifications. Regulatory reform, including the Cyber Security Bill 2024, is reshaping compliance expectations. Insureds who invest in cyber resilience, contractual risk transfer, and employee training will be best positioned to secure sustainable coverage and manage emerging exposures.

Market Overview

The Australian cyber insurance market has entered a period of softening, marked by competitive pricing, expanded capacity, and broader access to coverage. This shift is a welcome development for insureds, particularly as cyber threats continue to evolve in complexity and scale. Ransomware, AI-enabled attacks, and supply chain vulnerabilities remain dominant concerns, with threat actors targeting both large enterprises and SMEs. While the market is currently buyer-friendly, insurers are maintaining a disciplined approach to underwriting, particularly for organisations with weak cyber controls or exposure to high-risk sectors.

The softening of the Cyber market is a relief for insureds who are fighting cyber threats that are growing in complexity and scale.

The broader adoption of cybersecurity frameworks and regulatory reform is influencing both product design and risk selection. The introduction of the Cyber Security Bill 2024 is expected to reshape compliance obligations, increase accountability, and drive investment in cyber resilience. As the regulatory environment matures, insurers are adjusting coverage terms and introducing new policy features to address emerging risks, including those associated with Artificial Intelligence.

Premium Trends and Insurer Appetite

Premiums have softened across the board, with reductions of 5–15% available to organisations demonstrating strong cyber hygiene. This includes the implementation of multi-factor authentication (MFA), endpoint protection, and documented incident response protocols. New market entrants and offshore providers have increased competition, offering aggressive pricing and enhanced coverage options, particularly for mid-market and enterprise clients.

Insurers are actively seeking opportunities to deploy capital in the cyber market.

Capacity remains strong, with higher limits available for well-managed risks. Insurers are actively seeking opportunities to deploy capital, particularly where insureds can demonstrate robust controls and a proactive approach to cyber risk management. However, underwriting remains cautious for sectors with elevated exposure to ransomware, supply chain breaches, or legacy IT infrastructure.

Claims Trends

Ransomware continues to dominate the claims landscape, accounting for over 60% of large claim values in the first half of 2025. These attacks are becoming more sophisticated, often involving double extortion tactics and targeting critical infrastructure and service providers. Business Email Compromise (BEC) and funds misdirection fraud are also on the rise, despite widespread adoption of MFA and email filtering technologies.

Ransomware attacks account for more than 60% of large Cyber claims.

Supply chain breaches are emerging as a significant concern, particularly those involving managed service providers (MSPs), SaaS platforms, and cloud infrastructure. These incidents often result in cascading losses across multiple parties, complicating claims handling and recovery efforts. Insurers are increasingly scrutinising third-party risk management practices and contractual indemnities as part of their underwriting process.

Broker and Insured Considerations

To secure favourable terms in the current market, insureds must demonstrate a mature and well-documented cyber risk posture. Insurers are placing particular emphasis on the presence of MFA, endpoint protection, email authentication protocols, and incident response plans. Tabletop exercises and breach simulations are also viewed favourably, as they indicate preparedness and operational resilience.

Insurers are introducing specific endorsements or exclusions to clarify their coverage of AI-related exposures.

AI-related risks are prompting insurers to introduce affirmative endorsements or exclusions to clarify coverage boundaries. Organisations deploying AI tools—particularly in customer-facing or decision-making contexts—should be prepared to disclose usage details and demonstrate compliance with emerging regulatory frameworks. The Cyber Security Bill 2024 is expected to increase scrutiny around data collection, privacy, and incident reporting, with implications for both underwriting and claims handling.

Contractual risk transfer is another key consideration. Organisations should review vendor agreements, cloud service contracts, and MSP arrangements to ensure appropriate indemnities and breach notification protocols are in place. Employee training remains critical, particularly in mitigating phishing, social engineering, and credential compromise.

Outlook

The cyber insurance market is expected to remain buyer-friendly through 2025–26, supported by strong capacity and increased competition. However, insurers will continue to tighten underwriting for high-risk sectors and organisations with inadequate controls. AI, supply chain risk, and regulatory compliance will dominate underwriting conversations, with insurers seeking greater transparency and assurance around emerging exposures.

Insureds who invest in cyber resilience, maintain strong governance, and engage proactively with the market will be best positioned to secure competitive terms and sustainable coverage. As the threat landscape continues to evolve, a disciplined and forward-looking approach to cyber risk management will be essential.

Workers Compensation

Summary

Australia’s workers compensation landscape for 2025–2026 is marked by jurisdiction-specific changes in legislation, premium rates, and return-to-work (RTW) obligations. While some states—such as Queensland and Victoria—have opted to hold or freeze average premium rates, others including New South Wales, Western Australia, and Tasmania have introduced increases in response to scheme cost pressures. Across all jurisdictions, there is a clear emphasis on strengthening RTW frameworks, with new or reinforced requirements for injury management systems, RTW coordinators, and employer compliance.

Employers are encouraged to engage early in the renewal process, ensure accurate wage declarations, and align with updated legislative expectations. Demonstrating strong safety practices, proactive injury management, and compliance with RTW obligations will be critical to managing premium outcomes and maintaining insurer confidence. As the regulatory environment continues to evolve, businesses that invest in robust systems and broker partnerships will be best positioned to navigate the complexity and secure sustainable workers compensation arrangements.

Market Overview

Australia’s workers compensation landscape continues to evolve, with each state and territory implementing jurisdiction-specific changes to legislation, premium rates, and return-to-work (RTW) requirements. As we move into the 2025–2026 financial year, the market remains administratively complex, requiring employers to stay informed and proactive in managing compliance, cost, and claims performance. While average industry premium rates have remained stable in some jurisdictions, others have introduced increases in line with broader scheme reforms and cost pressures.

Premium rates are dependant on jurisdiction, stable in some and rising in others.

The national focus on psychological injury claims, RTW obligations, and injury management systems reflects a broader shift toward early intervention and improved recovery outcomes. Employers are expected to demonstrate greater accountability in rehabilitation planning, wage declarations, and compliance with updated legislative frameworks.

Legislative and Scheme Changes

Across the country, RTW requirements have been reinforced or newly introduced, with most jurisdictions mandating formal injury management systems and the appointment of trained RTW coordinators. In Victoria, employers with remuneration exceeding $2.5 million must now meet specific RTW obligations, including training for businesses with more than 50 workers. Queensland and South Australia have introduced similar thresholds, with detailed procedural expectations for high-wage or high-risk employers.

New South Wales has enacted the Workers Compensation Legislation Amendment Bill 2025, which introduces significant changes to psychological injury claims and mandates that all employers implement a documented RTW program within 12 months of commencing operations. SIRA’s updated guidelines provide further clarity for Category 1 and 2 employers.

In Western Australia, updated WorkCover forms will take effect from 1 July 2025, requiring brokers and employers to adopt the new documentation. The ACT has introduced RTW coordinator requirements for employers with annual premiums exceeding $200,000, while Tasmania and the Northern Territory continue to enforce structured injury management obligations under their respective legislative frameworks.

Premium Trends

Premium rate movements for 2025–2026 vary by jurisdiction. Queensland has opted to freeze its average premium rate at $1.343 per $100 of wages, while Victoria is holding its average industry rate at 1.8%, pending confirmation of changes to WorkCover Industry Classifications (WICs). In contrast, New South Wales has implemented an 8% average increase as part of a staged 24% uplift over three years, reflecting scheme cost pressures and broader reform objectives.

Premiums in Queensland and Victoria are stable, while they are rising in New South Wales, Western Australia, and Tasmania. The Northern Territory continues to use insurer-managed pricing.

Western Australia has announced a 5.3% increase in its average premium rate, rising to 1.823% of wages. Tasmania has introduced an 8.99% increase, lifting its average rate to 2.06%. The ACT has applied a modest 1.8% increase, bringing its average premium rate to 2.04%. South Australia’s position for 2025–2026 is yet to be confirmed, though the previous year’s average rate was 1.85%. The Northern Territory continues to operate under insurer-managed pricing, with no published average rate.

These variations underscore the importance of jurisdiction-specific planning and early engagement with brokers to manage renewal timelines, wage declarations, and premium forecasting.

Strategic Considerations

Employers should take a proactive approach to workers compensation management. Accurate wage declarations, submitted within the required timeframes, are essential to avoid premium discrepancies and ensure timely issuance of Certificates of Currency.

Beyond compliance, employers should focus on strengthening their injury management frameworks. Appointing qualified RTW coordinators, maintaining up-to-date rehabilitation policies, and aligning with jurisdictional guidelines will not only support legislative compliance but also improve claims outcomes and reduce premium volatility.

In high-risk or high-wage sectors, early engagement with insurers and brokers is critical. Demonstrating a commitment to safety, early intervention, and structured return-to-work planning can materially influence underwriting outcomes and support more favourable premium terms.

Outlook

The 2025–2026 workers compensation environment reflects a continued emphasis on compliance, early intervention, and scheme sustainability. While premium rates remain stable in some jurisdictions, others are adjusting pricing to reflect evolving cost pressures and legislative reforms. Employers who invest in robust injury management systems, maintain accurate data, and engage early in the renewal process will be best positioned to navigate the complexity of the national framework and secure optimal outcomes.

The information on this page is intended for general educational purposes and necessarily simplifies some concepts for clarity. Insurance policies can differ widely between insurers, policy types, and jurisdictions. For guidance on your specific circumstances, you should review your policy documents carefully and consult a qualified insurance adviser, broker, or legal professional.