The Insurance Council of Australia (ICA) has expressed concerns about the escalating costs of insurance, especially for homeowners.
The ICA revealed that in 2022, insurers spent $1.04 for every dollar they collected. The year saw over 300,000 disaster-related claims, amounting to over $7 billion in insured losses. In total, insurers paid out a staggering $36.5 billion in claims for that year.
A study commissioned by the Australian Research Council Centre of Excellence for Climate Extremes, conducted by the University of New South Wales (UNSW) Canberra and the Australian National University, warns of heightened bushfire risks in the future. The research suggests that cold fronts can intensify bushfires, and the risk of severe bushfire seasons, similar to the Black Summer, is on the rise. In a related study, Professor Jason Sharples from UNSW Canberra highlighted that while El Niño conditions don't guarantee bushfires, the combination of higher temperatures, decreased rainfall, and drier climates can lead to catastrophic fires. He urged preparedness for worsening bushfire conditions in the coming years.
The costs of recent disasters are being reflected in Premiums. As an example, Insurance Australia Group (IAG) has indicated that insurance premiums will rise in the 2024 fiscal year due to factors like inflation, increased reinsurance costs, and expenses related to natural disasters. IAG, the parent company of renowned insurance brands NRMA and CGU, announced a 26% increase in its natural perils allowance, reaching $1.147 billion (US$731 billion) from the previous year's $909 million. Currently, about one-fifth of the premiums IAG collects are used to cover reinsurance and the natural perils allowance.
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Author: Kerry Plowright
