January 2024 Market Update – Contractors Plant & Equipment

The Australian insurance market continues to demonstrate broad appetite and significant capacity for earthmoving equipment, elevated work platforms and similarly ‘less exposed’ equipment. More exposed equipment such as cranes and underground items are less desirable. Inflation and increased claim costs are mostly responsible for rate increases.

We have experienced capacity from London re-entering Australia and predict this competition may lead to more competitive pricing, especially for more exposed equipment.

In assessing premium, underwriters will have regard to:

Loss history (with regard particularly to frequency of claims, excess held and net claim payable)

Assessment of fleet (size, value of vehicles and types of items)

Insured’s experience owning and operating similar equipment

Item usage (underground, in catastrophe prone areas)

Industry loss trends.

For larger asset schedules and premium pools, policyholders tend to benefit from alternative self-insured retentions and ‘aggregate deductible’ structures. The latter allows an insured to self-insure multiple claims up to a predetermined combined limit. If the limit is met or exceeded, the insurer then indemnifies the insured for losses thereafter.

Insured’s benefit from reduced government charges and lower upfront insurance costs at policy inception. For businesses with strong risk management systems, insureds further benefit from cost savings, if no losses occur, to be self-insured.

Risk management

GPS tracking of equipment and remote shut down capabilities have proven to mitigate theft losses: the initiative is looked on favourably by insurers. Ensuring operators are suitably trained, using qualified and competent transport operators to move equipment, and keeping plant and equipment serviced and maintained are simple steps insureds can take to minimise losses.

Keeping abreast of hazards will assist insureds in minimising claims. Some measures include safeguarding items from impending storms and cyclones, and storing away from hazards such as combustible materials or bush.