In 2024, the average customer paid 19.3% more for home insurance coverage, with premiums rising from $1,070 to $1,277. Car insurance premiums also saw a 12% increase, climbing from $845 to $945. These increases have been a major factor in boosting the profitability of insurers.
The year was marked by fewer significant weather events, with only two notable incidents: the Valentine's Day storms in Victoria and severe weather in New South Wales and Queensland in April. These events resulted in $566 million in losses from 49,000 claims, a significant decrease from the $2.356 billion paid out across 143,900 claims from catastrophes and significant events in 2023.
Scott Guse, assurance and risk partner at KPMG, described 2024 as a benign weather year for insurers. He noted that the absence of major catastrophic weather events played a crucial role in the industry's profitability.
However, the surge in profits has raised concerns about the affordability of insurance for consumers. The Australian Competition and Consumer Commission (ACCC) has noted that while the government's cyclone reinsurance pool has moderated price rises in cyclone-prone areas, premiums across much of the country remain high and continue to climb.
Consumer groups have argued that households are right to question whether they are paying fair prices or simply funding big returns for shareholders. The Australian Financial Complaints Authority (AFCA) has reported record levels of complaints about general insurers, with more than 29,000 complaints in the last financial year. Less than 4% of these complaints are about premium increases, indicating broader issues within the industry.
As the industry continues to navigate the balance between profitability and affordability, it is essential for insurers to maintain transparency and fairness in their pricing strategies. Consumers are encouraged to shop around and compare policies to ensure they are receiving the best value for their insurance needs.
