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Homeowners might soon see some stability in home insurance rates as the industry grapples with escalating costs due to extreme weather events.
Industry leaders expressed tentative optimism about the future of premium rate hikes during a Senate inquiry into climate risk and its implications on insurance pricing.
RACQ Insurance CEO Trent Sayers shared, "Our latest reinsurance renewals suggest the peak of premium rate rises might be behind us. I anticipate we won't experience the same level of inflationary pressure on insurance costs in FY25 as seen in the recent past."
Both RACQ Insurance and Suncorp appeared before the Senate committee in Brisbane, offering their perspectives amid community grievances aired during prior hearings in Ballina, NSW. Senators challenged insurers on their premium-setting processes, questioning the impact of climate risks and why premium hikes surpass general inflation rates.
Suncorp's EGM of Motor Prevention and Protection Portfolio, Tim Buckett, remarked, "Pricing in anticipation of expected loss within the next year is inherently complex, especially with natural hazards accounting for two-thirds of this risk."
Buckett acknowledged the difficulty in maintaining pricing transparency, noting, "Our ongoing goal is to simplify this process for our customers, despite navigating through challenging market cycles."
The aftermath of the 2022 record floods has significantly impacted market toughness, as explained by Buckett. He elaborated that various elements, including but not limited to floods, bushfires, cyclones, earthquakes, and storm surges, contribute to risk pricing. The increased building costs, which have surged by over 30% according to Australian Bureau of Statistics, also factor into these adjustments.
"Even stable event frequency doesn't shield consumers from cost increases, primarily driven by construction costs," Buckett added. "Building levees, for instance, inadvertently pushes up expected losses and, consequently, premiums."
Sayers underscored the link between heightened natural disaster occurrences and insurance claims, stating, "The growing frequency and intensity of disasters pressurize insurance premiums. To manage these risks, we consistently reassess our models and adjust pricing to ensure the industry's solvency and sustainability, although this unfortunately means higher costs for some policyholders."
Discussing challenges specific to high-risk locations, Sayers remarked, "Areas prone to floods have experienced significant premium hikes, challenging insurance accessibility. Premium determination is intricate, considering multiple risk evaluation factors."
Senators also grilled Suncorp on its "massive profit" of $510 million during the December half. Buckett responded, "These profits stem from a large capital base, essential for covering possible losses exceeding $7 billion. It's critical for the Australian insurance industry to remain robust and sustainable, ensuring our capacity to rebuild in the wake of disasters. Thus, earning a feasible return on that capital is non-negotiable."
The Senate committee aims to finalize and present its comprehensive report by November 19, continuing to scrutinize and address the evolving dynamics between climate risk and financial resilience in the insurance sector.
In response to the escalating conflict in the Middle East, Australian travel insurers have mobilised additional resources to support affected travellers. The Insurance Council of Australia (ICA) announced that insurers are providing dedicated 24/7 assistance, coordinating medical care, and prioritising support for those in impacted regions. - read more
Southern Cross Travel Insurance (SCTI) has reported a notable gap between Australians' attitudes towards domestic travel insurance and the claims being paid. In the first eight and a half months of 2025, SCTI settled over $240,000 in claims for local and interstate trips. Despite this, only about 41% of Australians consider travel insurance a high priority for domestic trips, compared to 76% for international travel. - read more
Australian travellers are facing ongoing flight disruptions, with cancellation rates climbing above long-term averages. According to the latest data from the Bureau of Infrastructure, Transport and Regional Economics (BITRE), the national flight cancellation rate reached 2.6% in February 2025, exceeding the long-term average of 2.2%. On-time performance for both arrivals and departures also fell below historical benchmarks. - read more
Starting 1 April 2026, Australians will face an average increase of 4.41% in private health insurance premiums, marking the most significant rise since 2017. This adjustment comes in the wake of escalating healthcare costs and increased utilisation of health services. - read more
In 2025, Australian insurers faced significant financial challenges due to climate-related catastrophes, with insured losses totalling an estimated US$2.9 billion. This substantial figure underscores the escalating impact of climate change on the insurance industry and the broader economy. - read more
Life insurance and estate planning are critical components of financial security. They ensure that your loved ones are protected financially when you are no longer around. By understanding these tools, you can take significant steps to secure your family's future. - read more
Welcome to a pivotal guide dedicated to empowering you with the essentials of income protection insurance in Australia. As we navigate through times of uncertainty, safeguarding your financial wellbeing becomes not just a priority, but a necessity. Income protection insurance stands as one of the key pillars of financial security, ensuring a steady flow of income during periods when you're unable to work due to illness or injury. - read more
Life insurance is a crucial part of any comprehensive financial plan, providing peace of mind that your loved ones will be financially secure in the event of your passing. - read more
Choosing the right life insurance policy is one of the most important decisions for Australians, especially for those who are middle-aged or older. Life insurance provides financial security for your loved ones in the event of your passing, ensuring that they are not burdened with financial hardships. - read more
The financial fabric of our lives consists of both planning and safeguarding against the unforeseen. Trauma cover, a lesser-known but crucial aspect of personal insurance, provides this protection by offering a lump sum payment upon diagnosis of specific serious illnesses or injuries. In the tapestry of financial planning, it acts as a vital safety net, ensuring that unexpected health crises do not lead to monetary distress. - read more
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Knowledgebase
Reinsurance: Insurance that an insurance company purchases from another insurance company to mitigate risk.
