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% rise, reaching an average of $845. These increases have placed additional financial burdens on consumers, raising concerns about affordability and accessibility of insurance coverage.
The year 2024 was notably calm in terms of natural disasters, with only two significant events: 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 from catastrophes and significant events in 2023.
Scott Guse, KPMG's assurance and risk partner, described 2024 as a benign weather year for insurers. He noted that the absence of major catastrophic events significantly contributed to the industry's profitability.
Investment income also played a crucial role, contributing $3 billion to the total profit. This is triple the five-year average, reflecting strong performance in investment markets during the year.
While the profitability of insurers has improved, the substantial premium increases have sparked debates about the balance between maintaining financial stability for insurers and ensuring affordability for consumers. The industry faces the challenge of justifying these hikes, especially in a year with fewer claims due to mild weather conditions.
Looking ahead, insurers must navigate the delicate balance between profitability and consumer affordability. Transparent communication about the factors influencing premium rates and proactive measures to mitigate future risks will be essential in maintaining consumer trust and industry stability.
