The soft market headline your large corporate client just read may not apply to your SME client and accident and health (A&H) is where that gap has opened widest.
Brokers placing A&H business in Australia are now working two markets that behave in opposite directions. At the top end, insurer competition for large accounts has driven terms to a point where rate is being given away to win growth. In the SME and mid-corporate segment, particularly travel, premiums are still creeping up. A broker who quotes the market average to either client will be wrong.
Jarrod O'Connor (pictured), southern region branch manager and head of accident and health at Arch Insurance Australia in Melbourne, put the cause squarely on where new capacity has chosen to deploy.
"That capacity and desire for quick growth is creating two different markets within A&H: a large account market and an SME to mid-corporate market," O'Connor said.
The macro numbers support the top half of that picture emphatically. Marsh's Global Insurance Market Index recorded a 13% decline in Pacific insurance rates in the second quarter of 2026, the steepest of any region, in what was the eighth consecutive quarter of global composite rate decreases. The first quarter told the same story, with Pacific rates down 12%, insurers focused on growth and retention, and multiple insurers competing for new and restructured business. Coverage terms were generally negotiable, with clients securing increased limits, lower deductibles and in some cases the removal of mandatory endorsements.
Those figures come with a caveat that matters more than the figures themselves: the index is a composite across property, casualty, financial lines and cyber rather than an A&H series. The most widely quoted evidence of a softening Australian market does not measure the class in question.
O'Connor's account of the smaller end runs the other way.
"The SME sector, especially on travel, is much more stable - we're still seeing slight increases, partly driven by historic underpricing in some areas," he said.
That last clause is the one worth sitting with. Slight increases driven by historic underpricing is not a soft market correcting downward. It is a segment still working its way back to technical adequacy while the segment above it discounts.
For brokers, that reframes the SME renewal entirely. The increase is not a market failure to be argued down - it is a correction the underwriter can justify on loss experience, and pushing back on rate alone is unlikely to move it. The available leverage sits in structure rather than price: limits, deductibles, benefit schedules and the terms concessions that Marsh reports are broadly negotiable across the Pacific market. A client told plainly that their segment was underpriced and is repricing will accept a small increase more readily than one who has read that rates are falling 13% and been given no explanation.
O'Connor's answer is that A&H should correct faster than most classes and he attaches a condition to it.
"Hopefully going into 2027, we can start to see some rate progression in the large account space - assuming no new capacity enters the market in that period," he said.
The reasoning behind the timing is structural, and it is the same reasoning that explains the split. A&H is a short-tail class, so losses report quickly and underwriters find out sooner whether the price they wrote was adequate. O'Connor's view is that the A&H cycle is shorter than other lines, shorter even than property, because long-tail classes have longer cycles that sit further apart while short tails run closer together. Where a casualty book might take years to reveal that pricing was wrong, an A&H book reveals it in months. That is why the SME segment is already repricing off historic underpricing, and why the large account discounting now underway should surface in results well before a comparable casualty cycle would.
The conditional in his forecast is doing a lot of work, though. Rate progression in 2027 depends on no further capacity arriving, and Marsh has attributed the current downward trend in part to reinsurer growth and the entry of new insurers.
The practical read for brokers is a narrow window rather than a trend. Large account clients have leverage now and it is unlikely to widen, which makes this the year to secure multi-year terms if the client wants them. SME clients never had that leverage and should be told so directly rather than left to discover it at renewal.
