The Insurance Council of Australia (ICA) has highlighted significant challenges facing the Australian insurance industry, including a surge in claims, rising premiums, and an expanding insurance protection gap, which is placing more Australians at financial risk. In 2024, the industry issued a record 41 million policies for households and businesses, with claims totaling over $20.2 billion (A$32 billion).
Several factors are driving up the cost of premiums, including increasing natural disasters, development in high-risk areas, inflation, rising asset values, and supply chain shortages. As these pressures mount, the ICA is calling for greater government investment in risk reduction to mitigate the growing financial strain.
In response, the ICA has proposed the establishment of a $19 billion (A$30.15 billion) Flood Defence Fund, aimed at improving flood mitigation infrastructure and protecting vulnerable properties. This proposal builds upon initiatives like the Disaster Ready Fund, which was launched after the ICA’s 2022 call for increased investment in disaster resilience.
The insurance industry is still grappling with the aftermath of the 2022 floods, which resulted in nearly $4.0 billion (A$6.4 billion) in insured losses. To address the delays in claims processing, insurers have worked to streamline their responses, commissioning Deloitte to review their efforts and track progress. A follow-up report in early 2025 noted improvements, including shorter claims resolution times, but stressed that further work is needed to enhance the customer experience.
The ICA has also accepted 78 recommendations from recent industry reviews. These recommendations focus on raising consumer awareness, supporting vulnerable customers, investing in disaster preparedness, and fostering collaboration with government agencies on risk mitigation strategies.
As the industry continues to evolve, the ICA’s proposal for a substantial Flood Defence Fund underscores the urgent need for proactive measures to protect Australians from increasing flood risks.
(Exchange rate: $1.00 = A$1.60)
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