The cost of reinsurance in Australia is not a new story. But the scale of it, laid out in cold figures in Australian Prudential Regulation Authority (APRA) quarterly data released on May 29 2026, is worth dwelling on.
In the March 2026 quarter, total net reinsurance expense for the Australian general insurance industry - the net cost of purchasing catastrophe protection after recoveries - was $2.46 billion. In the September 2025 quarter it was $2.98 billion. In September 2024 it was $3.14 billion. In eight of the ten quarters in the dataset, total reinsurance cost exceeded $2 billion. The two exceptions - March 2025 ($305 million) and December 2025 ($326 million) - reflect the accounting treatment of reinsurance under AASB 17, where quarterly recognition of reinsurance premiums can produce anomalous readings depending on renewal timing, rather than genuinely low reinsurance spend.
Taking the more representative quarters, the industry has been spending between $2.1 billion and $3.1 billion per quarter on reinsurance protection. Annualised, that represents approximately $9 billion to $12 billion per year - and that is before accounting for the base cost of quota share and proportional treaties that are captured separately.
The central challenge the APRA data poses is this: if the industry is spending between $2 billion and $3 billion per quarter on reinsurance, why did the December 2025 catastrophe quarter still produce a householders underwriting loss of $1.08 billion and total industry profit after tax of just $134 million?
The answer lies in the nature of the protection purchased and the scale of the events that triggered claims. Reinsurance covers catastrophe losses above defined attachment points, it does not eliminate the primary layer of exposure, and it does not protect against the aggregate impact of multiple events each falling below or near the attachment point. The December 2025 quarter appears to have involved a pattern of losses that absorbed primary retentions across multiple lines and geographies before reinsurance recoveries became material.
Total net reinsurance expense — all classes ($B)
Quarterly, December 2023 to March 2026 — all APRA-authorised general insurers
Note: Mar-25 ($0.30B) and Dec-25 ($0.33B) are anomalously low due to AASB 17 annual renewal timing, not genuinely low reinsurance spend.
Source: APRA, Quarterly General Insurance Performance Statistics Database, Sep 2023–Mar 2026, released 29 May 2026.
Grace Ng, a partner in KPMG's general insurance actuarial practice, said the prescribed capital amount is designed to represent the minimum level of capital required to withstand severe but plausible stress scenarios, while the capital buffer exists to absorb fluctuations arising from actual experience, including catastrophe losses.
“The fact that capital buffers declined following the December catastrophe events and subsequently recovered does not, in itself, suggest that the minimum capital requirement is miscalibrated,” said Ng. “Rather, it demonstrates the role that capital buffers are intended to play in absorbing short-term volatility.”
It also reflects the householders-specific reinsurance dynamic. In the March 2025 quarter, the net reinsurance expense for the householders class alone was positive $1.1 billion - a recovery rather than a cost, reflecting large-scale reinsurance recoveries following prior-period catastrophe events. In other quarters, the same class paid net reinsurance costs of $654 million to $992 million. The volatility of reinsurance cash flows within the householders book is itself a risk management challenge.
As Insurance Business reported in April 2026, the ratio of reinsurance premiums to insurance service revenue among Australian general insurers is among the highest of any developed-world property and casualty market. Following the catastrophe sequence from 2019 to 2022 — Black Summer bushfires, the south-east Queensland and New South Wales floods, Tropical Cyclones Seroja and Jasper — reinsurance costs surged at successive January and July renewals. Those increases have never fully reversed.
The Australian Reinsurance Pool Corporation provides cyclone reinsurance at below-market rates in high-risk northern and coastal areas, and its role in moderating the most extreme reinsurance costs for exposed residential property is important. But the commercial property, liability, and motor lines that sit outside the ARPC's scope remain fully exposed to global reinsurance pricing — and global reinsurers are increasingly cautious about Australian catastrophe risk.
For insurers, the APRA data makes the case for continued investment in risk mitigation, risk selection, and portfolio management. A market that consistently spends $2 billion or more per quarter on reinsurance, yet still absorbs a $1 billion underwriting loss in a severe quarter, needs to examine whether it is buying the right protection at the right attachment points — or whether structural changes to portfolio construction would reduce the primary retention that reinsurance cannot reach.
For brokers, the reinsurance cost story is relevant to every commercial property client conversation. As Gallagher Bassett's 2026 claims insights research confirmed, premium affordability and insurability rank as the leading business challenge for Australian insurers. The reinsurance cost embedded in every commercial property premium is a significant component of the price a client pays — and understanding why that cost is there, and what it reflects about Australia's risk profile, is fundamental to advising clients on coverage decisions in a market where affordability is increasingly contested.
Source: APRA, Quarterly General Insurance Performance Statistics Database, September 2023 to March 2026, released 29 May 2026. All figures are in Australian dollars and based on APRA-authorised general insurers. Lloyd's Australian operations are not included
