Australian Insurers Anticipate Earnings Decline Following Record Highs
Industry Braces for Profitability Normalisation Amid Market Adjustments
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In the 2024-25 financial year, Australia's general insurance sector achieved a remarkable return on equity (ROE) of 19%, marking the highest profitability in a decade.
This exceptional performance was driven by robust underwriting results, substantial investment returns, and a period of relatively mild natural disaster activity.
However, industry experts caution that such elevated earnings are unlikely to persist.
According to Finity's annual sector review, the industry is projected to experience a moderation in profitability, with ROE expected to decrease by six percentage points to 13% in the current financial year. This anticipated decline aligns with the industry's target range of 10% to 15%, suggesting a return to more typical profit levels.
Several factors contribute to this expected earnings slowdown. Notably, premium growth is forecasted to continue its moderation. In the 2024-25 period, gross written premium (GWP) increased by 6%, a deceleration from the double-digit growth observed in the preceding three years. This trend is attributed to reduced rate increases across personal insurance lines and a softening market in various commercial sectors.
Looking ahead, Finity predicts that GWP growth will further slow to 4.5% in the current financial year. This projection reflects ongoing moderation in premium rates across most insurance classes. Specifically, personal lines GWP, which grew by 9% in the previous year, is expected to ease to 6%. In the commercial lines segment, GWP growth is anticipated to remain steady at 3%, mirroring last year's performance amid continued soft market conditions, particularly in corporate and financial lines.
These developments underscore the cyclical nature of the insurance industry, where periods of high profitability are often followed by phases of adjustment and normalisation. Insurers are advised to remain vigilant, adapting their strategies to navigate the evolving market landscape effectively.
Published:Wednesday, 11th Mar 2026 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
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In the 2024-25 financial year, Australia's general insurance sector achieved a remarkable return on equity (ROE) of 19%, marking the highest profitability in a decade. This exceptional performance was driven by robust underwriting results, substantial investment returns, and a period of relatively mild natural disaster activity. However, industry experts caution that such elevated earnings are unlikely to persist. - read more
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