Australian specialty insurance market outlook 

The Australian cyber insurance market continues to expand in gross written premium, policy numbers and new entrants, including agencies backed by the London market. Despite this growth and a multi-year soft pricing environment, significant upside remains as SME take-up is still relatively low. At the same time, cyber claims are rising steadily, alongside increased third-party risk, regulatory enforcement and class-action exposure. Ransomware and business email compromise attacks remain frequent, while supply-chain attacks and insider threats are becoming more prominent.

What’s changed? 

• Regulatory and litigation risk: In November 2025, the Australian privacy regulator secured its first multi-million penalty in relation to a cyber breach. Regulatory enforcement action and class action risk are increasing more broadly, while Australia’s relatively new statutory tort for serious invasions of privacy creates another potential avenue for claims. 
• Attack trends: Ransomware and business email compromise remain frequent, while we are seeing increasing supply-chain attacks, insider threats and website vulnerabilities. 
• Ransom payment and reporting: In 2025, Australia became the first country globally to introduce mandatory ransom payment reporting for certain organisations. Based on our claims data, we have seen a strong increase in ransom payments during 2026.
• Pricing: The Australian cyber insurance market remains soft market for premiums, profits for insurers and agencies remain strong, despite the increased frequency and complexity of claims. 

Why this matters

For London insurers already providing capacity to Australian cyber portfolios through local agencies and excess-layer placements, the market presents both growth opportunities and emerging risk. Low SME penetration leaves room for further expansion but increasing regulatory and class action exposure and changing attack patterns make disciplined risk selection increasingly important.

The challenge will be capturing growth without allowing competitive pricing to run ahead of the changing claims environment. 

Looking ahead
Over the next six months, we predict the Australian market will continue broadly along its current path: soft premiums, slowly increased policy counts and a steady flow of increasingly complex claims.

AI is one area to watch closely. We are already seeing third parties use AI tools to assist with regulatory complaints and demands. We expect AI will also increasingly be used by threat actors to perpetrate cyber-attacks, potentially changing both the frequency and sophistication of claims. 

For London insurers, understanding how quickly these risks develop will be important when considering underwriting appetite, pricing and policy response in Australia. 

Contact
Eden Winokur
Partner and Head of Cyber

Financial line claims frequency in Australia is down, but severity is up, with inflation, including rising legal costs, a key driver. Class actions across the consumer, employment and financial services sectors continue despite an otherwise benign D&O market, while shareholder class actions are entering a new phase. 

Construction remains a persistent PI hot spot, with rising insolvencies driven by higher costs and tighter margins fuelling claims. Financial lines remain a firmly soft market, and Lloyd’s share of the Australian PI market continues to grow. If pricing continues to soften, it may understate the real risk.

What’s changed? 

• Shareholder class actions: A recent watershed decision saw damages awarded to plaintiffs in an Australian shareholder class action for the first time following judgment. The decision confirms that market-based causation can work in practice and potentially reduces some of the traditional hurdles plaintiffs have faced in proving causation and loss. 
• Regulatory enforcement: ASIC investigations and court filings are up, with its 2026 priorities spanning insurer claims and complaint handling, private credit, financial reporting and audit misconduct, superannuation trustee accountability, and the Shield / First Guardian investigations. This is drawing advisors, licensees, trustees, auditors, accountants and other gatekeepers into the liability chain.
• Management liability: Intentional wage underpayment is now a criminal offence, raising EPL and statutory liability exposure and the potential for personal liability for directors and officers. 
• Construction PI: Statutory duties of care are creating exposure beyond builders, with site supervisors and other building practitioners potentially facing liability for defects. 

Why this matters
For London insurers, Australia financial lines risk is becoming more enforcement-led, technical and cross-professional. Regulatory investigations are likely to continue feeding defence costs and coverage disputes, while developments in shareholder class actions could affect litigation exposure, settlement strategy and reserving. 

Soft pricing risks understating these exposures, particularly across financial services and construction PI.

Looking ahead

The High Court is expected to provide further guidance on market-based causation and proving shareholder loss, which could materially influence the trajectory of shareholder class actions. 

Construction PI claims should remain a key frequency driver over the next 12–18 months, as latent defect claims continue to emerge, and insolvencies leave claimants pursuing solvent professionals and their insurers. Accounting and audit PI claims are also increasing in frequency and severity.  from the post-inflation, fixed-price contracting environment, leaving  

We are also seeing self-represented litigants use AI in disputes, particularly in employment matters, potentially reducing barriers to bringing claims and increasing claim volumes. 

Contact
Bridget Wall
Partner

Australia’s marine insurance market covers both commercial and consumer risks with the pleasurecraft market forming a large percentage of the underwriting revenue.

Australia’s economy is heavily dependent on the global and local supply chain given the need to export minerals, livestock, agricultural produce and LNG and import almost all consumer goods, fuel and processed products.  Its size means that intra Australia transport by road and rail forms an important part of the cargo and carrier’s liability market.

The Hull and P&I markets are dominated by small commercial vessels, tugs, barges, ferries, tourism vessels and alike. The level of sophistication of commercial vessel operators is varied meaning that insurers have to select risks carefully.

What’s changed?

• Road carriers: We have seen an increase in claims against road carriers arising out of unfair contract terms legislation applying to standard form contracts for small businesses.

• Pleasurecraft: Large losses arising from battery fires with the increased use of battery powered toys and equipment.

• Salvage and wreck removal: Access to service providers around Australia’s lengthy coastline remains a challenge for Hull and P&I insurers with costs often disproportionate due to lack competition.

• Repair costs: Costs have increased with significant inflation and a reduction in skilled marine tradespeople.

Why this matters

The specialist nature of the Australian marine market lends itself to the underwriting agency model backed by both local and international insurers. The London market generally participates by providing security for such agencies. 

For London insurers, the diversity of marine risks and varying sophistication of commercial vessel operators make careful underwriting and risk selection particularly important. 

Looking ahead

Risk selection will remain a key in such a varied market. Careful underwriting will be needed to succeed in a niche market where premium revenue may not be significant, particularly as repair, salvage and wreck removal costs remain elevated. 

Contact
Chris Sacré
Partner

Australian casualty exposure is increasingly being shaped by psychosocial risk, institutional liability, workplace safety regulation and plaintiff-side creativity. The market is not facing a single shock event; rather, it is seeing gradual pressure across long-tail classes where psychological injury, abuse claims, workplace conduct and damages inflation can quietly affect reserves and coverage positions.

What’s changed?

• Psychological injury: NSW’s workers compensation reforms for primary psychological injuries apply to claims first notified from 1 July 2026, with tighter requirements around relevant events, employment connection and causation.

• Psychosocial risk: Psychosocial hazard regulation is now embedded as a national WHS issue, requiring employers to evidence systems and controls, not just policies.

• Psychiatric injury: Courts continue to test the limits of psychiatric injury claims, including foreseeability, proximity and duty of care in fact-sensitive settings. Most injury claims now include a related psychiatric injury claim.

• Plaintiff activity: Claims remain broad, spanning bullying and harassment, abuse and institutional liability, construction defect and cladding claims, product liability, worker to worker claims and civil liability bracket creep.

Why this matters

These trends do not sit neatly inside workers compensation. Psychosocial injury and workplace conduct exposures can flow into casualty, management liability, EPL, public liability and D&O type programmes.

For London insurers, the risk is one of silent deterioration: claims can develop slowly, interact across policy lines and create reserving uncertainty before the market sees a sharp loss signal.

Looking ahead

Over the next six months, expect scrutiny of NSW psychological injury reform implementation, more regulator attention on psychosocial WHS compliance, and closer monitoring of psychiatric injury appellate decisions. Abuse claim settlement patterns, public liability severity and the interaction between employment disputes and liability policies should also remain watch points.

The Insurance Council of Australia has recently called for a broad review of Australia's civil liability framework, pointing to increasing claims costs and litigation complexity. Its reform priorities include psychological injury, third-party nervous shock and worker-to-worker claims, as well as clearer and more consistent liability settings across jurisdictions. 

Any reform in these areas could have important implications for long-tail casualty exposures and claims management. 

Contact
John Van de Poll
Partner

Australia’s property insurance market is experiencing softening conditions, with intense competition among insurers to attract premium. New and strengthened entrants to the Australian market are adding further competitive pressure, creating opportunities for insureds while placing greater emphasis on disciplined risk election and pricing. 

What’s changed

• Underwriting: Insurers are increasingly using AI and data to assess underwriting risk and premium, with these tools playing a growing role in risk selection and pricing. 

• Property damage claims: A recent High Court decision has strengthened the ability of property owners to bring claims in nuisance for damage to real property, potentially expanding the avenues available to claimants. While further judicial clarification is expected, insurers should be alert to how nuisance claims develop and the potential implications for property damage exposures and recoveries.

• Claims handling: Complaints to the Australian Financial Complaints Authority regarding insurance claims continue to rise, requiring larger teams and greater expertise within insurers to respond to increasing disputes. Insurers’ claims assessment and management processes are also facing increased scrutiny.  

• Emerging losses: We are seeing increasing claims for water damage to property as Australia’s water infrastructure ages and fails, as well as increasing claims for property damage caused by lithium batteries.

Why this matters
For London insurers participating in Australian property risks, softening conditions creates opportunities to participate in the market, but careful underwriting remains important. Pricing and risk selection need to account for changing property damage exposures and evolving causes of action, alongside increased scrutiny of claims handling.

Looking ahead

Over the next six months, we expect the use of AI in underwriting to continue to increase as insurers seek to improve risk assessment and pricing.

Weather conditions will also remain a key consideration, with the prospect of El Niño conditions increasing bushfire risk and the potential for significant property losses.

Against a backdrop of a soft market and increasing competition, maintaining underwriting discipline will remain important as insurers balance opportunities for growth against evolving claims exposures.

Contact
Leigh Parker
Partner

Hall & Wilcox is a leading Australian independent law firm. Our purpose is to enable our clients, our people and our communities to thrive. 

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