Flood disasters trigger insurance premium spike, but the sector suffers profit drop

The data showed that gross premiums have increased from $8.3 billion in 2019 to $10.4 billion last year, in line with rainfall increasing from 102,000 millimeters in 2019 to 172,000 millimeters last year.

But far from insurers profiting from higher premiums, the profitability of the general insurance segment declined during the period thanks to the increasing prevalence of catastrophes.

Wild weather fluctuations

The sector recovered from a $144 million loss at the height of the pandemic in 2020 to end last year $140 million in the black, but for this calendar year to date the industry is back in the red to the tune of $11 million, the research found . The data showed that paid claims have increased from 1901 in 2017 to 4801 in 2020 and 4509 last year.

“You can clearly see a broad correlation with how increases in rainfall are affecting the insurance sector over the past three years,” said Mr. Heke.

“This is yet another, yet underdiscussed, driver of inflation and higher living costs for Australians and businesses.”

And as cost of living pressures continue to hit, the trend of increasing premiums is not going away fast, leading to fears many – particularly those living in flood zones or fire-prone areas – will either become uninsured or uninsurable without a comprehensive plan for action .

“It is a whole of system solution that needs to be undertaken in Australia and globally, and you’re starting to see that where governments are taking greater responsibility,” Mr Heke said.

Leave a Reply

Your email address will not be published.