Market Summary H2 2026

Conditions favour buyers across most commercial classes, but price is only part of the story.

Executive Summary

Conditions favour buyers across most commercial classes, but two areas run against the trend.

Property, casualty, construction, professional indemnity and cyber are all softening, though more slowly than last year, and insurers are now competing on coverage terms as well as price. Two areas run against the trend: domestic property remains firm, and small to mid-sized businesses buying management liability are still facing upward pressure.

Price is only part of the story, as insurers are paying closer attention to risk quality. Businesses that can show current valuations, sound governance, tested cyber controls and a clean claims history are securing the best results. Those that cannot are not sharing in the benefit.

Two themes run throughout this update:

  • A firm's ability to showcase risk management protocols is the #1 driver of premium outcomes.
  • AI is changing both the risks firms carry and the way insurers assess them.

Soft markets are temporary. Directors and officers cover is the class most likely to turn first, and a major catastrophe or cyber event could shift conditions quickly.

Our general recommendation is to use this window to secure broader cover and stronger terms, not only a lower premium.

In the Spotlight

AI Now Touches Every Policy

Twelve months ago, AI was an emerging topic. It is now a standing question at renewal, and it cuts across almost every class we place.

For professional firms, liability for an incorrect AI output typically sits with the firm using the tool, not the technology provider. Insurers now ask about AI use as a matter of routine, and firms should confirm their professional indemnity wording explicitly addresses it. In cyber, AI has lowered the cost of attack. Phishing tools can cost as little as $75 to run, and deepfake impersonation of executives and suppliers is being used to trick staff into authorising payments. Casualty insurers are watching AI-related liability develop, and insurers are starting to weigh AI governance in directors and officers underwriting.

Regulation is catching up. From 10 December 2026, new privacy rules require businesses to be transparent where automated decisions significantly affect individuals. That is less than two months away.

Three practical steps will help.

  • Ask us whether your policies address AI explicitly.
  • Put a verification step (such as a call-back to a known number) on any payment or bank detail change.
  • Document how your business uses AI, because insurers increasingly want to see it.

Emerging Risks

Resultant Property Damage from Cyber Incidents

Most cyber policies exclude physical damage, and many property policies exclude losses connected to cyber events. A cyber attack that damages buildings, machinery or stock, and the business interruption that follows, can therefore fall between the two policies.

Two scenarios show how this could play out. An attacker disables the temperature alarms and refrigeration controls at a supermarket, and a night's worth of perishable stock spoils. Or an attacker switches off vibration warnings at a mining plant, so a mill seizes, damages its foundations and halts production for weeks. Neither is a data breach, yet both are cyber losses, and neither may be covered.

Businesses that rely on connected equipment are most exposed, including manufacturers, construction firms, utilities, mining and energy operators, food and accommodation providers, and large retailers. A small number of specialist insurers now offer affirmative cover. Your property and cyber policies should be read side by side to see where one exclusion meets the other's gap.

Latent Defects

Latent defects are building faults that only surface years after completion. New laws in NSW and Victoria are creating insurance for them, and the effects will reach developers, builders, designers and apartment owners.

In NSW, developers of residential strata buildings over three storeys must provide either a building bond or ten-year latent defects insurance. Legislation passed in August 2026 clarified the scope of that cover, and the government has described it as the final legislative groundwork for ten-year protection. Victoria has passed legislation allowing decennial (ten-year) insurance as an alternative to its developer bond, which protects for roughly two years. Other states have been slower to act.

The insurance is new and the market is still developing. Insurers who pay these claims can pursue the designers and builders responsible, so we expect the reforms to influence professional indemnity and construction liability underwriting and pricing.

If you develop, build or design apartments in NSW or Victoria, speak to us early about how this affects project costs and cover.

Commercial Property

Market Overview

Buyers hold the stronger hand. Most placements now attract several competing offers, and insurers are flexible when they want to win your business. Results still vary widely with location, construction type, how the building is used and catastrophe exposure, so your outcome depends on your own risk profile more than the headline market.

Insurer Appetite

Insurers want well-managed risks with strong risk engineering, current valuations and good claims experience. Competition amongst domestic and international insurers is widening coverage options, and incumbent insurers are working harder to keep accounts at renewal. Sites exposed to flood, cyclone, bushfire or catastrophe accumulation still receive closer review.

Capacity and Reinsurance

Capacity is plentiful. Most SME and mid-market placements can access several insurers, and some markets are now quoting on risks that previously drew little interest. Reinsurance (the cover insurers buy to protect themselves) has been stable, which keeps underwriting approaches and programme structures steady. For you, that means more choice at renewal and less chance of a sudden change in terms.

Loss-free, well-performing risks are achieving reductions of up to 15%, particularly where valuations are current and catastrophe exposure is limited. Outcomes remain segmented by exposure, occupation and claims history. In some sectors, broader cover is being secured without a matching increase in premium, so it is worth asking for more than a lower price.

Insurers are placing more weight on data quality, risk engineering and resilience measures, and more sophisticated catastrophe modelling is shaping both price and capacity. Parametric solutions, which pay out when an agreed measurable trigger is met (such as a defined wind speed or rainfall volume) continue to gain ground for catastrophe exposure. Accurate asset information increasingly separates strong submissions from average ones.

Challenges and Emerging Risks

Repair and rebuild costs keep rising, and weather-related losses continue to shape insurer strategy. If your sums insured have not kept pace, you risk being underinsured at claim time, which can reduce a payout proportionally. Insurers are also asking harder questions about asset resilience and business continuity planning.

Regulatory Oversight

APRA remains focused on climate risk, operational resilience and capital adequacy, which supports insurer stability. The ACCC's monitoring continues to highlight affordability pressures despite the benefits of the cyclone reinsurance pool. Insurers also face growing expectations on data governance and claims performance, keeping claims standards under scrutiny.

Strategic Considerations

  • Use current conditions to lock in longer-term pricing and coverage improvements.
  • Update your valuations, document any risk improvements, and review excesses, programme structure and your catastrophe strategy before the cycle changes.

Outlook

Conditions should stay supportive in the near term. A significant natural catastrophe is the most likely trigger for change, and risk quality will continue to separate strong renewal outcomes from average ones. Businesses that strengthen their cover and resilience now will be best placed if the market turns.

Domestic Property

Market Overview

Home insurance remains firm while commercial property softens. Price increases are slowing for lower-risk properties as insurers compete harder, but natural disasters, rising claims costs and rebuilding expenses keep pressure on premiums. If you own a home, investment property or holiday home, expect another increase, though a smaller one.

Insurer Appetite

Insurers want standard homes in low-risk locations with good claims histories. They remain cautious on properties exposed to flood, bushfire or cyclone, and apply stricter requirements to high net worth homes, heritage properties and short-term rentals. Property condition, how it is occupied and past claims all carry weight.

Capacity and Reinsurance

Cover remains widely available, although choice narrows in high-risk locations. Reinsurance costs and natural disaster risk continue to shape what insurers charge and how much cover they offer. Specialist insurers still cover prestige homes and high-value contents, subject to individual assessment.

Premiums are still rising across much of the market, but more slowly. Well-maintained properties with good claims histories in lower-risk locations are seeing more competitive pricing. Properties exposed to natural disasters, or with previous claims, continue to pay more and face tighter terms.

Pricing is becoming more granular, with insurers assessing disaster risk property by property. They are also focused on maintenance, particularly burst or leaking pipes and roof defects. More policyholders are choosing higher excesses to reduce premiums, and demand continues for specialist high net worth policies with broader cover and enhanced claims services.

Challenges and Emerging Risks

Storms, hail, flood and bushfire remain the major causes of claims, and water damage from burst pipes and roof leaks is common. Higher material and labour costs, along with repair delays, push claim costs up, which makes accurate rebuild values critical. Affordability and underinsurance are growing concerns, particularly in disaster-exposed areas. A standard home policy may also not respond as expected when a property is let as a short-term rental.

Regulatory Oversight

ASIC continues to focus on home claims handling, disclosure and customer outcomes. Regulators are also paying closer attention to affordability, pricing transparency and availability in high-risk areas, and governments and industry are working on resilience measures. These efforts are aimed at clearer information and fairer outcomes for policyholders.

Strategic Considerations

  • Review your building and contents values so they reflect today's rebuilding costs.
  • Compare higher excess options, and look at the market rather than renewing automatically.
  • Check that your policy matches how you use the property, particularly for holiday homes and short-term rentals.
  • For complex or high-value homes, a specialist high net worth policy may offer broader cover and better protection.

Outlook

Premiums should keep rising through the rest of 2026, but at a slower rate. Well-maintained properties with good claims histories should benefit most from improved competition. Properties in high-risk locations, or with more complex features, are likely to keep facing stricter conditions. Natural disasters, rebuilding costs and reinsurance conditions will continue to drive pricing.

Casualty

Market Overview

Casualty insurance covers your liability for injury or damage to others (such as Products Liability or Public Liability). Insurers are competing for well-managed businesses across most industries, and those with stable claims experience are benefiting. Underwriting on long-tail liability remains disciplined, because claims can take years to emerge and settle.

Insurer Appetite

Competition is strongest for organisations with established governance and strong operational controls. Insurers are offering broader terms and competing on programme structure. Construction and care-related industries still face more detailed underwriting.

Capacity and Reinsurance

A broad range of insurers are active in both primary and excess liability layers, which expands the options for how your programme is designed and placed. Insurers are also showing more flexibility on coverage structure and excess levels, so it is worth testing different options.

Well-performing liability programmes are holding flat or receiving reductions up to 10%. Broader cover and excess negotiations are increasingly available. Businesses with losses, or more complex liability profiles, are seeing tepid results.

Claims frequency, and how well a business manages its claims, influence underwriting decisions. Insurers are looking harder at contractual risk transfer (the contracts that push liability onto others) and at governance processes. They increasingly distinguish between businesses with documented risk controls and those without.

Challenges and Emerging Risks

Court awards, legal costs and claims inflation remain longer-term concerns for insurers and could eventually flow back into pricing. Liability arising from new technology, including AI, continues to evolve and may not sit neatly within existing wordings.

Regulatory Oversight

APRA continues to monitor insurers' reserve adequacy and operational resilience, while ASIC maintains its focus on claims handling and customer outcomes. For businesses, governance, documentation and claims transparency are increasingly part of what underwriters assess.

Strategic Considerations

  • Test the market and reassess your limits instead of renewing automatically.
  • Prepare a detailed renewal submission, including a clear account of any past claims and the steps taken since. Insurers reward that effort.

Outlook

Conditions should remain favourable for well-managed organisations. Competition is likely to support stable pricing across many sectors, and businesses with strong governance and a positive claims record should continue to secure the best terms.

Construction

Market Overview

The softening trend has continued into late 2026, though at a more moderate pace. Competition remains strong in contract works (also known as 'construction all risks') and liability, and insurers are competing for high-quality risks. A contractor with a solid record has real negotiating power.

Insurer Appetite

Appetite for construction risks is solid, and insurers are more flexible with endorsements and conditions. Excesses for worker-to-worker injury and water damage remain high, although some insurers are showing signs of reducing them.

Capacity and Reinsurance

Reinsurance conditions are stable after consecutive years of rate correction, and both local and global insurers have strong capacity. That supports competition and gives you the opportunity to compare several quotes.

Renewal movements depend on contract values, claims history and turnover:

  • Contract works (CAR): -10% to +5%.
  • Liability: -20% to +5%.

Medium and larger contractors with strong performance can access significant reductions.

Insurers are managing exposure through excesses and endorsements rather than declining risks, and they are rewarding quality submissions. A new product category is also forming in latent defects insurance, driven by state reforms (see Emerging Risks).

Challenges and Emerging Risks

Water damage and worker-to-worker injury claims remain severe, which is why excesses stay high. Inflation, higher oil prices, trade shortages and elevated construction costs are lifting insured values and claim costs, and squeezing contractor margins. Check that your contract values and sums insured reflect current costs. Higher interest rates should eventually ease liability pricing, because insurers earn more investment income on long-tail classes.

Regulatory Oversight

States are introducing new insurance requirements, particularly around developer bonds and latent defects cover, and changes to Builders Warranty Insurance have altered financial requirements in several states. If you build, develop, or design in NSW or Victoria, these changes may affect your contracts and costs.

Strategic Considerations

High-quality, detailed submissions deliver the best outcomes. Engage insurers early, well before renewal, to improve both premium and coverage. Accurate contract values and turnover estimates matter, because both drive pricing.

Outlook

Competitive conditions should continue through 2026 and into 2027. Insurers will keep rewarding strong claims histories and robust risk management, and early engagement and demonstrable risk quality will remain the key differentiators.

Professional Indemnity

Market Overview

The market remains soft heading into the final months of 2026, with reductions of 5% to 10% available, though these have moderated since January. Your result depends heavily on your profession and size.

Insurer Appetite

Appetite is very strong, backed by local insurer capacity and continued growth at Lloyd's, which holds a growing share of the Australian PI market. Insurers increasingly use PI as the anchor for a broader package, bundling it with technology liability, intellectual property and cyber. That suits professional firms looking for wider protection from one placement.

Capacity and Reinsurance

Capacity is ample. Underwriting agencies and delegated authority models keep growing, and Lloyd's syndicates are deepening their participation rather than retreating. The competition this creates for placements gives you leverage on terms.

The 5% to 10% reduction range hides meaningful variation by profession:

  • Financial services licensees: rates are stabilising, with reductions still available for well-governed firms.
  • Accountants and auditors: caution about further reductions in the second half, following intense regulatory scrutiny.
  • Solicitors: primary layers largely stable; excess layers up to 10% lower, with larger reductions above $100 million.
  • IT and SaaS providers: continued softening, supported by strong cyber liability loss ratios.
  • Construction professionals: SME rates have dropped but are now plateauing.
  • Valuers: softening continues, with insurers assessing risk management maturity firm by firm.

Engineering and financial occupations are also easing from their COVID-era peaks, with average written premium down 15% and 26% respectively.

AI exposure is now a standing underwriting topic. Firms should confirm their wording explicitly addresses AI and technology use, because liability for incorrect AI outputs typically sits with the professional firm. The outcome of the ASIC v FIIG Securities court case shows how a single technology event can trigger claims under several insuring clauses, which strengthens the case for broader, better-integrated wordings.

Challenges and Emerging Risks

The AML/CTF reforms extending reporting obligations to lawyers, accountants, real estate agents, and trust and company service providers took effect in July 2026. This is a significant new compliance burden, and we expect it to increase claims frequency and premiums for these professions over time.

In construction, the Brisbane Olympics build programme is concentrating risk with the same insurers in the Project PI market, and lead consultants are increasingly asked to carry higher, costlier standalone limits.

Regulatory Oversight

ASIC's 2026 enforcement priorities include private credit practices, which is sharpening insurer focus on disclosure, valuations and conflicts of interest for funds in this sector.

In construction, recent cladding decisions are reshaping how liability and coverage interact. Victorian architects also face new obligations under the Architects Regulations 2026.

Strategic Considerations

  • Use the favourable market to secure broader wording and better excess structures rather than chasing price alone. Insurers are now competing more on terms than on rate.
  • Firms using AI in service delivery should confirm their wording extends to AI-related errors.
  • Construction professionals should stay selective about clients and projects, given early signs of long-tail claims from soft-market underwriting years.

Outlook

PI should stay soft through the rest of 2026, but the easiest gains have been taken. We expect harder conditions for construction professionals within two to three years, consistent with pricing that sits below technical levels across financial lines.

Management Liability

Market Overview

Management liability is running at two speeds. The broader market continues to ease, with reductions of 5% to 10% common and insurers offering broader cover, lower excesses and more flexible structures for well-managed risks. At the smaller end, the picture differs. Management liability was the one PI product line to buck the softening trend in the year to 2024, with premiums up 14% while directors and officers premiums fell 16%. Our own portfolio shows the same pattern: SME and mid-market clients continue to see upward pressure, even as larger, well-governed businesses secure reductions.

Insurer Appetite

Appetite is steady to strong for well-managed SME and mid-market businesses, and insurers differentiate sharply between strong and weak governance or claims history. New insurer entrants are specifically targeting this segment.

Capacity and Reinsurance

Capacity is adequate to strong. Growth in underwriting agencies and Lloyd's-backed capacity is lifting competition for SME and mid-market placements, which gives you more options to compare.

Forecasts pointed to reductions of 5% to 15% across the class, but that has not flowed through evenly. Pressure at the smaller end is linked to Director Penalty Notices, which can make directors personally liable for certain unpaid company tax and superannuation debts. Notices tripled, which makes this a real personal exposure for SME directors, and it is feeding insolvent trading and breach of duty claims.

Insurers are widening wordings to match where claims are coming from. Enhanced employment practices cover, regulatory defence extensions and affirmative cyber governance cover are becoming standard rather than optional extras. Cyber, fraud, regulatory investigation and workplace safety are increasingly underwritten as a connected set of exposures, not separate risks.

Challenges and Emerging Risks

Employment practices claims remain the most frequent trigger for notifications, including wrongful termination, discrimination and whistleblower actions. This fits the psychosocial injury trend we flagged in our H1 edition: claims are up 160% over the past decade and now make up 12% of serious workers' compensation claims nationally. Rising WHS investigations and privacy exposures add to the pressure, and defence costs remain significant even when allegations are groundless.

Regulatory Oversight

AML/CTF obligations now extend to lawyers, accountants, real estate agents, and trust and company service providers, following reforms that took effect in July 2026. For these sectors, that is a direct management liability exposure as well as a PI one. Tighter privacy laws have increased regulatory investigations and allegations of management failure, and psychosocial safety regulations remain active and enforced in every Australian jurisdiction.

Strategic Considerations

  • Review your limits and scope against where claims are actually landing, namely employment practices and regulatory investigation costs, rather than renewing on autopilot.
  • SMEs should weigh the newer, more integrated products that bundle cyber and regulatory investigation cover against traditional standalone structures.
  • Clear evidence of governance, HR process and early intervention on workplace issues is the strongest lever available to offset upward pressure on this class.

Outlook

Directors and officers cover, and by extension integrated management liability programmes, may be the first products to feel a hardening market. For SMEs, there is no sign yet that Director Penalty Notice-driven claims are slowing. Expect continued, moderate increases at that end of the market, even as large corporate cover keeps easing.

Directors and Officers

Market Overview

The market remains buyer-friendly, but the pace of decline is slowing. Reductions of 15% to 40% were common in 2025, and mid-2026 reductions have ranged from 10% to 30% for strong risks. If you are a director of a well-governed business, cover is cheaper and broader than it was, but we expect that to change as the volume of claims grows.

Insurer Appetite

Insurers still want well-governed businesses, but they are pushing back at renewal on distressed companies, those with disclosure concerns, and sectors including construction, healthcare, technology and private credit. They are also expected to reduce derivative action cover, or apply lower limits for specific claims, for companies facing action from ASIC, the ACCC, APRA or AUSTRAC. Some are beginning to ask about AI governance.

Capacity and Reinsurance

Capacity remains ample from local and international insurers. Even so, some smaller insurers have withdrawn from D&O or consolidated their books as margins tighten. A growing number of large listed companies had reduced or dropped Side C (cover for the company itself against securities claims), and some are now reconsidering.

Strong risks are seeing reductions of 10% to 30%. Distressed or disclosure-sensitive businesses, and those in construction, healthcare, technology or private credit, are seeing flat to 10% higher outcomes. Across the wider market, rates have levelled off, with many policies renewing as expiring.

Claims activity is shifting. Class action filings are at their lowest since 2022, but insurers expect more derivative actions, where shareholders sue directors on the company's behalf. Insurers are also pricing in AI governance, climate disclosure and cyber oversight. At renewal, the questions are moving beyond financials to how your board oversees these issues.

Challenges and Emerging Risks

Director Penalty Notices tripled in a year, increasing personal exposure for directors of smaller companies. For larger companies, two recent Federal Court decisions and a High Court decision could reshape how shareholders must prove loss. ASIC has also pursued licensees over cyber controls, linking cyber failures to board oversight.

Regulatory Oversight

Mandatory climate reporting is being phased in from 2025 for many listed companies, and ASIC and the ACCC have escalated greenwashing enforcement. AML/CTF obligations extended to more professions from July 2026, and 2025 privacy changes introduced a statutory tort for serious invasions of privacy and gave the privacy regulator greater powers. Each adds to the personal accountability directors carry.

Strategic Considerations

  • Treat a lower premium as only part of the benefit. Check your limits and structure, particularly derivative action cover, sub-limits and any exclusions linked to regulator investigations.
  • Keep clear board records showing oversight of cyber, climate and AI.
  • Where pricing is attractive, ask us about securing longer-term terms.

Outlook

We expect D&O to stay soft through the rest of 2026 for strong risks, but it is the class most likely to turn first. Possible catalysts include a High Court ruling that makes it easier for shareholders to prove loss, growth in derivative actions and further insolvencies. Businesses with weaker financials or disclosure issues will feel the change sooner.

Cyber Liability

Market Overview

The cyber market remains soft, but the rate of easing is flattening. Premiums are stabilising, competition still favours buyers and underwriting discipline is holding. The risk itself is entering a new phase, driven by AI-accelerated attacks, geopolitical tension and a more demanding regulatory environment.

Insurer Appetite

Appetite is very strong, and many insurers are chasing growth in the SME and mid-market segments with expanded cover and simpler wordings. Underwriting has not loosened to match. Insurers are asking more exacting security questions even as headline prices fall, so a lower premium still depends on being able to show your controls.

Capacity and Reinsurance

Capacity continues to grow, supported by reinsurance innovation such as insurance-linked securities and parametric structures. Strategic alliances are also adding local capacity.

Clean, well-presented cyber risks should see reductions of about 5% to 12% through the second half of the year, moderating from sharper falls in 2025. Relief is uneven. Healthcare, manufacturing, construction, transportation, retail and education are seeing less favourable terms because of a worse claims environment locally and overseas. Most other industries should see slight relief.

Insurers are moving toward integrated products that combine cyber, technology liability and general liability in one policy. Prevention services such as dark web monitoring, incident response hotlines and tabletop exercises are now standard inclusions in several leading policies, not add-ons. For you, that means practical support before and during an incident, often at no extra cost.

Challenges and Emerging Risks

There were 1,205 data breach notifications in 2025 under the Notifiable Data Breaches scheme. Of these, 716 were attributed to malicious or criminal attacks. Global claims data for 2025 shows business email compromise and funds transfer fraud together made up 58% of claims. These are global figures, but they set the loss environment Australian underwriters are pricing against.

Regulatory Oversight

Businesses with annual turnover above $3 million must report a ransomware payment within 72 hours, and this has applied since 30 May 2025. APRA has named AI-enabled cyber threats, technology concentration risk and operational resilience as supervisory priorities for 2026-27. If you supply to regulated entities, expect more questions about your own resilience.

Strategic Considerations

  • The baseline has not changed. Multi-factor authentication, endpoint detection and response, and tested backups remain the controls underwriters expect, and gaps here are the most common cause of friction at claim time.
  • With pricing still favourable, use this window to lock in broader terms and built-in incident response support, not just to bank the saving.
  • Cyber cover should sit inside a broader risk management programme, not stand in for one.

Outlook

Conditions should stay soft through the balance of 2026. Systemic risk is the factor most likely to trigger rapid repricing, whether through large-scale outages, supply chain compromises or AI-accelerated attack campaigns. Over the medium term, demand should keep growing as regulation tightens and awareness improves, although take-up among smaller businesses still lags their actual exposure.

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.