If 2020 taught us anything, it's to expect the unexpected - with the uncertainty of the pandemic still over us, we cannot look too far ahead.
The weather has also been unusually volatile with hailstorms, an increase in tropical cyclones and large scale bushfires (Black Summer resulted in $6B of catastrophe claims) impacting all corners of Australia over the last 12 months.
The 2020/21 Tropical Cyclone forecast from The Bureau of Meteorology
Insurance rates are proving a little easier to predict as insurer profitability is at a 20 year low due poor insurer returns, catastrophic weather events and COVID-19, meaning we can expect to see continued rate increases across nearly all types of insurance.
Below goes deeper into what we can expect from the lines of insurance most relevant to Adapt Risk Solutions and our client base, being Strata/Commercial Property and Business related insurance.
Corporate Property
Commercial and Strata Property insurance rates have likely seen their biggest increases over the last 12-24 months, yet we do not anticipate any rate decreases over the next period as the true impact of large natural peril losses is realised.
Insurer market availability continues to shrink for properties in high risk locations, those with Aluminum Composite Cladding attached and properties with outstanding building defects. The markets that still provide capacity are placing larger excesses and restrictions on cover to help mitigate their losses.
“As this disciplined market progresses, natural catastrophe is one of the areas where you will see a lot of tightening-up regarding deductibles and limits,”
FM Global
Business Insurance
Overall, premium rates for SME Business Package insurance increased around 5 % for FY20 and this trend has continued into FY21 - mainly across the Property aspect of the policy where most claims are made.
Insurers do see a slight improvement in returns across Public Liability as less claims (slip/trip) are made from a reduction in foot traffic due to COVID-19. This may be offset however, due to a reduction in businesses revenue and insurance premium relief methods implemented to assist SME's.
Financial Lines
Large rate increases has seen insurers premium pool grow over the last 2 years and while we can expect further rate increases, they could be at a more moderate level moving forward.
The fallout from the Royal Commission, ongoing claim costs pressures and a potential for COVID-19 losses reinforces that it could be another another 12-24 months before the market stabilizies and eventually begins to soften - especially with insurer options reducing also.
Below provides an overview on how the performance of each major line of insurance is tracking for FY21. 
Adapting into 2021 and Beyond..
The insurance industry is adapting to the times in a number of ways - whether it's optimizing the claims process through self serve claims portals, or using drone technology to carry out site surveys, technology is transforming the way the insurers operate as they look to return to profit - which will eventually see rates soften.
New products were launched in the wake of the pandemic with demand growing for tailored products such as business-continuity cover, cyber-threat protection, pandemic insurance, and event-cancellation insurance.
Our Message
The message we keep repeating is how important it is to put yourself on the same page as the insurer.
Your broker should be finding out what risk management practices insures want to see, then working closely with you on implementing them - you will not receive the insurers best possible terms otherwise.
Our recent blog posts on Commercial Property and Strata Property insurance provide guidance on what insurers like to see and how to best position yourself at insurance renewal time.
Working with a broker that specialises in your field is paramount, as they are in the position to provide these insights.
Adapt Risk Solutions specialise in Strata Property and Commercial Property insurance, feel welcome to contact us at info@adaptrs.com.au for any insurance related advice.