According to KPMG's annual review, the average home insurance premium rose by 19.3%, increasing from $1,070 to $1,277. Similarly, car insurance premiums saw a 12% uptick, climbing from $845 to $945. These adjustments have been pivotal in bolstering the industry's financial performance.
The year 2024 was notably calm in terms of catastrophic weather events, with only two significant 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 stark contrast to the $2.356 billion paid out across 143,900 claims in 2023.
Scott Guse, KPMG's assurance and risk partner, highlighted the impact of the benign weather on the industry's results, noting that the absence of major natural disasters played a crucial role in the improved financial outcomes.
Investment income also contributed significantly, with insurers earning $3 billion from investments, tripling the five-year average. This boost is reflective of the strong performance in investment markets during the year.
While these figures indicate a robust financial position for insurers, they also raise questions about the balance between profitability and affordability for consumers. The substantial premium increases have placed additional financial pressure on policyholders, prompting discussions about the sustainability of such hikes and the need for transparency in pricing strategies.
As the industry moves forward, it will be essential to monitor how insurers balance profitability with consumer affordability, especially in the face of potential future climate-related events that could impact claims and premiums.
