Analysis of the general insurance market in Australia
KPMG’s General Insurance Insights 2025 provides concise, insightful analysis of the general insurance sector using statistical data from Australian Prudential Regulation Authority (APRA) and Insurance Council of Australia (ICA).
Our 2025 insights comprises two sections.
General insurance market snapshot
- Results snapshot
- Trends snapshot
Snapshot of the general insurance market data for direct insurers to 31 December 2024.
* September 2023 quarter profit and loss information was not published by APRA. An average has been applied.
^ Source: Insurance Council of Australia – Historical Significant Event and Catastrophe Data March 2025.
A snapshot of the top emerging industry trends.
Results and analysis
Concise analysis of Australia’a general insurance sector to 31 December 2024.
The 2024 insurance industry profit was $6.1 billion (previous 5-year average: $2 billion) being predominantly driven by a benign natural hazard period, premium price increases, COVID-19 provision releases and positive investment market returns. The insurance industry profit (before investment income, after taxes) was $3.1 billion (previous 5-year average: $0.97 billion).
Losses from natural hazard events totalled $566 million for the industry, a significant reduction from 2023’s $2,356 million. In 2024, no catastrophes were declared and there were only two significant events: the Valentine’s Day Storms in Victoria, and the Severe Weather in NSW and QLD in April. This compares to 2023, where two events – Tropical Cyclone Jasper and the Christmas and New Year Storms – were designated as Catastrophes.
This experience is reflected in the reduced natural hazard claims of 49,000 (2023: 143,900). Insurers’ natural hazard experience was generally below their planned-for allowances, and 2024 was the first year since 2019 that insurers recorded profitable underwriting results on their householders’ portfolios.
2024 significant events
| Event number | Description | Claims count | Total loss $m |
| Significant event 242 | Severe Weather NSW & QLD | 21,200 | 332 |
| Significant event 241 | Valentine's Day Storms Victoria | 27,800 | 234 |
| Total | 49,000 | 566 |
2023 catastrophes/significant events
| Event number | Description | Claims count | Total loss $m |
| Catastrophe 233 | Christmas and New Year Storms | 106,000 | 1,570 |
| Catastrophe 232 | Tropical Cyclone Jasper | 10,400 | 409 |
| Significant event 231 | Newcastle Hailstorm | 27,500 | 377 |
| Total | 143,000 | 2,356 |
Supporting data
Source: Insurance Council of Australia – Historical Significant Event and Catastrophe Data March 2025.
Insurers saw strong GWP growth across most products driven by premium rate increases. Rate increases reflect pricing of worsening disaster risk, increased reinsurance costs, moderating claims inflation, and supply chain shortages.
On 20 September 2024, the Federal Court made a judgement indicating it intended to grant the application to ‘declass’ COVID-19 business interruption class actions. This favourable decision saw insurers significantly revise down provisions, releasing previous year provisions into current year profits.
Insurers have maintained strong momentum investing in programs, technology, and strategic alliances to set themselves up for the future.
- Investment in AI that helps identify customer pain points, better tailors and prices products more fairly, and creates other operational efficiencies has rapidly increased.
- In a deal worth $642 million, Allianz has (subject to regulatory approvals) announced a strategic partnership with the Royal Automobile Association (RAA), to purchase the general insurance business of RAA along with a 20-year exclusive distribution agreement, effectively expanding its consumer insurance presence in South Australia.
- In a deal worth $855 million, IAG has (subject to regulatory approvals) announced a 25-year strategic alliance with RACQ where it will acquire 90% of RACQ’s insurance underwriting business, (with an option to acquire the remaining 10% in two years on consistent terms) and will provide RACQ general insurance products and services for RACQ members and Queenslanders.
- Further, set-up of more responsive on-call teams that scale up for weather events, and community education programs for resilience preparedness, demonstrate an approach to managing the insurance value chain on many new and non-traditional fronts.
Income from investments (after taxes) was $3.0bn (previous 5-year average: $1.03bn) driven by strong performance of fixed interest securities, as well as most asset classes.
During 2024, insurers continued to deal with the aftermath of making remediation payments and holding provisions related to ASIC’s crackdown on insurers’ ability to deliver on their pricing promises, which found consumers were overcharged $815 million for their insurance.
The industry’s capital coverage at 31 December 2024 for direct insurers increased slightly to 1.82 times the APRA prescribed capital amount (2023: 1.76 times).
Insurance industry trends for 2025 and beyond
KPMG's views on the top general insurance trends that will shape and influence the industry for the remainder of 2025 and beyond.
- Resilience
- Digital & AI
- Environmental, social & governance
- Simplification & cost optimisation
- Regulation & compliance
- Cyber
General insurers continue to face pressure from the increasing frequency, severity and longevity of natural hazards, including floods, bushfires, and cyclones. Insurers must continue to work hand-in-hand with the government to manage these increasing risks in order to maintain an affordable and accessible insurance market for the Australian community.
Following the impacts of Ex-Tropical Cyclone Alfred in early March 2025, communities in northern New South Wales and south-east Queensland are experiencing a recovery phase, with ongoing challenges including flooding, damage, and the need for support services. Many of those properties that were impacted during previous flooding events (2011 and 2022) were again impacted in 2025.
According to the Insurance Council of Australia, the insured costs of extreme weather events have reached a record $22.5 billion over the past five years. Increased Commonwealth investment in proactive rather than reactive extreme-weather resilience measures remains essential. Amending building codes, reviewing zoning and land-use regulations, property buybacks, building flood levees, raising utilities and services above flood lines, and developing early warning systems are all examples of investing in mitigation measures.
A good example of government mitigation efforts is the $400 million per annum Disaster Ready Fund announced in 2023 which is co-funded by the Commonwealth and state/local governments. This will fund natural disaster resilience and risk reduction projects to protect communities from the impacts of natural hazards and is part of a wider five-year $2 billion investment. This represents a continued shift to government forward-thinking towards natural hazard management, and communities will see the benefits in future years.
The 2025 Federal Budget provides $28.8 million over two years to fund programs such as the Bushfire Community Recovery and Resilience Program and investment in national mobile broadband emergency response capabilities. Additionally, the government cyclone reinsurance pool and Hazards Insurance Partnership between government and industry seeks to address insurance affordability and availability. The Insurance Council of Australia noted, ‘Initiatives like the Disaster Ready Fund and the Hazards Insurance Partnership have provided the blueprint for collaboration. We must now turbocharge this approach – and the investment required to support it – to ensure a stronger, more secure future for all’. In line with this, it has recently proposed ‘a big idea to combat a big problem – the creation of a $30.15 billion, 10-year Defence Fund to deliver new flood defence infrastructure, strengthen or remove properties in harm’s way, and futureproof existing flood mitigation infrastructure’.
The government inquiry into insurers’ responses to the 2022 major floods represents an opportunity for government, insurers and all Australians to recognise the devastating impacts of those floods, evaluate both successes and failings, and better plan for the next inevitable event. Without intervention, premium costs will continue to rise in high-risk areas which will result in insurance being unaffordable for many customers. In March 2025, the Insurance Council of Australia released its General Insurance Industry Action Plan: Our response to recommendations for change which outlines the industry’s position on the remaining recommendations from the Parliamentary Flood Inquiry and the independent review of the industry’s Code of Practice.
Insurers hold significant data, research and understanding on weather events, that when partnered with government can contribute to a more resilient insurance market that protects all Australians.
An acceleration in digitisation is seeing insurers focused on creating the next-generation operation model. Significant investment in the creation of seamless customer experience, digital collaboration tools, data security, and driving towards a ‘target-state’ digital architecture have been front of mind. The emergence of generative artificial intelligence (gen AI) and the rise of AI agents provide an opportunity for insurers to shift how they operate, interact with customers and manage risk.
AI has been a part of the insurance industry for some time and continues to provide the opportunity for insurers to more deeply understand their customers and risks, but adoption varies across the industry, including across insurance type and region. For insurers, this can mean policies that dynamically adjust based on real-time risk factors, claims that are processed and settled instantly without human intervention, and customer service that is hyper-personalised, context-aware and available 24/7.
Further, AI models can simulate future scenarios, improve risk estimation, inform better pricing and identify fraudulent claims. Some insurers have started using AI to provide insight into weather events and forecast climate risk from a national level all the way down to a sub-postcode level. Our global Intelligent insurance publication noted 74% of insurers are seeking growth through AI, and the benefits are already being realised, with 76% having seen a moderate to high ROI from their investments so far. On the back of this, 67% report planning to increase spending on AI.
When deploying AI, insurers must ensure that AI is governed responsibly. Trust and ethics will need to be inextricably linked to AI design and operational success, with appropriate risk management practices critical to this. Many Australian insurers continue to maintain complex technology architecture, legacy systems, and manual or semi-automated processes that are inflexible when accommodating customer and regulatory change. Modernising the technology estate, addressing security and data privacy concerns, reducing data silos, and building new AI skills across the workforce will become more critical for insurers to unlock the potential of AI.
Regardless of how much insurers digitise and embed AI, their people remain essential to success. Maintaining a strong employee value proposition to attract and retain staff by deploying the right working model is crucial. The impact of AI and automation on the workforce is likely to involve moving staff away from manual, repetitive tasks into more value-adding roles, with companies that offer digital upskilling and training becoming more attractive. In our global KPMG 2024 Insurance CEO Outlook publication, 85% of insurers believe AI will not impact the number of jobs, but AI will likely require upskilling of existing resources.
Sustainability reporting matters. It demonstrates how an organisation supports a sustainable society, ultimately benefiting investors, customers and employees. Our global ESG in insurance publication found 96% of the global top 250 companies now report on sustainability or ESG matters. The majority of global insurance CEOs say that ESG is fully embedded into their business as a means of value creation and Australian insurers should look to replicate this.
The market is increasingly asking for organisations to report on their sustainability and our global KPMG 2024 Insurance CEO Outlook found 63% of global insurance organisations are confident they will meet their net zero goals by 2030. Sustainability can also help drive competitiveness and increased sales – such as through the growing demand for green or ethical insurance products and investment options.
Sustainability reporting does present challenges. Unlike financial reporting information, for which there are long-established processes and controls, the same is not the case for non-financial information. This data is from all areas across the organisation and is notably less mature in terms of quality and completeness. Some Australian insurers have set ESG targets and are now working on operationalising and reporting against these targets. This involves significant collaboration across the business from the decision-making process, to systems, cultural change, and reporting.
The Australian Sustainability Reporting Standards (ASRS) have been finalised and issued. In 2025 we will see the first reporting of climate-related financial disclosures that are required for certain entities under law. Insurers in Group 1, who will be the first to report at 31 December 2025, should be well advanced in finalising their ESG reporting program, operating model and planned assurance requirements. Insurers in subsequent groups should be setting up multifunctional project teams to work through the requirements of the standards to produce a roadmap to sustainability reporting and the related assurance requirements.
Balancing profitability and insurance affordability remains a key challenge for Australian general insurers in a cyclical insurance market. Significant inflation pressures, natural perils, and reinsurance costs are pushing up premiums and claims costs, impacting affordability.
Insurers are focusing on simplification and cost optimisation across the entire value chain, not just in traditional areas like claims management. Although there are always opportunities for greater efficiencies and cost savings in claims where a large portion of cost resides, there are other opportunities to drive cost and productivity.
We are seeing insurers focus on improving disciplines in workforce management and streamlining, digitisation and process automation (in both traditional automation and generative AI), and modernisation and simplification of legacy systems. Insurers must continue to think strategically around simplifying and optimising their business, which may involve strategic partnerships with third parties to unlock value. Pricing strategy, customer retention, dividends and investment capacity are all served by having an edge in cost management and productivity.
The general insurance industry has seen significant regulatory change over the past few years, with regulatory focus remaining a constant area of focus. This has left many insurers little time to refine and mature their compliance and reporting practices. CPS 230, AASB 17 and the Financial Accountability Regime (FAR) are among the significant regulatory changes that have been or are currently being implemented.
Ahead of the implementation of CPS 230, the emphasis for resilient operations, underpinned by clear accountabilities and the strong management of material service providers has become more critical. The key themes are preparedness for risk events, resilience through disruption – and protecting the organisation whilst managing the impacts to customers should not be underestimated.
Investment by general insurers to comply with AASB 17 was significant. Many of the smaller to medium sized insurers relied on tactical rather than strategic solutions. Insurers should be planning for further investment now in embedding longer-term solutions, to harness and derive value from the increasing data available. Increased data reporting requirements need to be supported by strategic data and technological architecture.
FAR aims to increase transparency and accountability, by creating a culture of accountability. Accountable Persons will need to closely understand their obligations, and FAR covers a wide range of functions, with examples including data management, product design, staff training and financial reporting. FAR should not be viewed as a transactional regulatory exercise, but rather an opportunity to drive better governance, accountability and improve operations.
Cyberattacks are becoming ever more sophisticated, with attackers leveraging new technologies such as AI to develop targeted phishing campaigns. The increased usage of generative AI results in new attack content, malware and phishing material that is challenging to combat, with deepfakes lending more credibility to attacker methods. Digital crime is broad and far-reaching, extending from the manipulation of documents to falsify insurance claims through to the use of AI in voice detection in call centres, making it ever more difficult to detect fraudulent activity. The data and privacy risks posed by the sheer volume of data ingested by AI models risks exposing sensitive data publicly, thus undermining business trust.
It is critical for insurers to try and get ahead of the game, employing defence in depth controls to secure their ecosystem, as well as proactively updating their security strategies to leverage new technology for the better, proactively detecting threats before they happen.
Our latest global Cybersecurity considerations 2025 report highlights the importance of the digital imperative in an AI world, where businesses are wanting to plough forward with AI quickly, but at the same time need to embed a level of trust in AI models and decisions being made. The need to race ahead safely while also balancing the focus on foundational security controls is as important now as ever. In our most recent KPMG 2024 Insurance CEO Outlook, cybercrime and cyber insecurity remained a top concern with only 54% (down from 66% last year) saying they were ‘well prepared’ for a cyberattack.
The rapid and ever-evolving nature of cyber risk poses a challenge to insurers to design appropriate and affordable cyber insurance products. Coverage is not able to be predicted based on prior claims experience, incomplete datasets make pricing premiums challenging, and the evolving nature of cyber risk itself is difficult to define in policies. In Australia, cyber insurance remains difficult to obtain and is only offered by a limited number of insurers. Insurers require a minimum standard of security controls prior to insuring a company, and this can create a barrier to entry to insurance for some organisations.
Connect with us
Leveraging our insights and global knowledge, KPMG is committed to supporting the general insurance sector in navigating a rapidly evolving insurance landscape.
Our team combines deep sector knowledge with extensive experience to address the risks and opportunities that matter most to insurers.
- Item 1
- Item 2
