Insurance companies have collectively banked $6.1 billion in annual profit after raising premiums and facing fewer significant weather events.
Australia’s insurance industry recorded an annual after-tax profit of $6.1 billion in 2024, according to financial consultancy firm KPMG’s annual review of the sector.
That’s three times higher than the five-year average of $2 billion.
There were no weather catastrophes in 2024 and only two significant events — the Valentine’s Day storms in Victoria and severe weather in NSW and Queensland in April.
Insurance companies had $566 million in losses from 49,000 claims, well down from the $2.356 billion paid out across 143,900 claims from catastrophes and significant events in 2023.
2024 a ‘benign weather year’
KPMG assurance and risk partner Scott Guse said 2024 was a benign weather year for insurers.
“We probably recall the massive Christmas Day storms that went through the Gold Coast and hinterland in December 2023 and we all recall the most recent Cyclone Alfred in February and March this year,” he told AAP.
“They didn’t get caught in this particular year that we’re looking at.
“It’s really those catastrophic weather events that drive or make the insurance result.”
As such, insurance-related profits totalled $3.1 billion, with the other $3 billion coming from investment income, also triple the five-year average.
“That shouldn’t be surprising to the public because most of us saw good investment returns for our superannuation funds in 2024,” Guse said.
Annual premium revenue jumped from $65.5 billion to $68 billion from 2023 to 2024.
The average customer paid 19.3 per cent more for home insurance coverage ($1277 up from $1070) and 12 per cent more for car insurance coverage ($845 up from $945).
The return to positive profits was a sign double-digit premium hikes were hopefully behind customers, Guse said.
“We do need our insurers to be viable and survive, and to do that they need to make profit,” he said.
“Because they were making losses, they need to put through price increases.
“But on top of that we then saw, through COVID, supply-chain issues, price inflation, the cost of builders all going up.”
Insurers continue to face pressure from the increasing frequency, severity and longevity of natural disasters, including floods, bushfires and cyclones.
Guse said it was impossible to tell what was around the corner amid climate change.
“We always know that it’s a bad season from October through to May and we’re not through that season as yet,” he said.
“The profits that were made last year could be largely eroded if we have a bad year.”
Without more intervention, the report warned premium costs would continue to rise in high-risk areas and make insurance unaffordable for many customers.
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