Australia’s insurance sector is ramping up its calls for urgent tax reform as escalating climate-related disaster costs and inflationary pressures continue to drive up premiums.
QBE Insurance chairman Mike Wilkins (main picture) used the group’s annual general meeting this week to renew pressure on state governments to slash insurance taxes, which he claims are exacerbating affordability challenges for households and businesses already grappling with rising risks.
“State insurance taxes raised $3.5 billion more than the entire general insurance industry’s profits in 2024,” Wilkins said, arguing that reducing these taxes was one of the few immediate levers available to relieve policyholder pain.
He added that while insurance premiums are a reflection of risk, the only long-term path to affordability lies in addressing the risks themselves — chiefly, the growing toll of extreme weather events.
Wilkins also criticised the public policy imbalance in disaster response, noting that only 3 per cent of public disaster funding currently goes towards mitigation measures such as levees and flood defences, with the remaining 97% spent on recovery.
“That balance must shift,” he said. “It’s simply not sustainable, economically or socially, to continue down this path.”
QBE’s renewed campaign for reform comes as the insurer continues to manage a complex mix of catastrophe claims and investment market volatility.
In its first-quarter update, QBE reported $420 million in catastrophe claims from events including Queensland’s floods, U.S. wildfires and Cyclone Alfred. That figure remains within its first-half allowance of $549 million and a further $611 million has been earmarked for the rest of the year.
At the same time, QBE maintained its full-year premium growth guidance in the mid-single digits. Gross written premium (GWP) rose 7 per cent in Q1, even after accounting for a $100 million drag from the run-off of non-core lines in North America. On a constant currency basis, premium growth hit 8%.
The group’s combined operating ratio remained on track at 92.5%, comfortably below the break-even mark of 100 per cent.
QBE’s global exposure makes it particularly sensitive to both climate volatility and geopolitical risk. Nonetheless, the company said underwriting exposures tied to trade disruptions from US President Donald Trump’s renewed tariff policies “should be limited.”
Yet QBE’s climate position is not without controversy.
At the AGM, shareholder activist group Australian Ethical challenged the insurer’s ongoing underwriting of natural gas developments, arguing it undermines the company’s broader risk reduction goals.
The call for lower state insurance taxes is not new, but industry voices have become louder as affordability pressures intensify. In its 2020-21 budget submission, The Tax Institute labelled Australia’s insurance taxes “inefficient and complicated,” and urged their immediate repeal.
These levies, including stamp duty and emergency services levies, can add between 10% and 30% to premium costs and disproportionately affect low-income households.
For the insurance sector, the stakes are rising. The average premium climbed 16% in 2024 with customers in flood- or fire-prone areas seeing even steeper increases. Suncorp, which paid out $1.1 billion in claims across 15 significant events in the year to April, has also benefited from federal reinsurance schemes that have helped contain losses. Cyclone Alfred alone triggered over 31,000 claims but cost the insurer just $85 million after government support.
Suncorp has postponed capital return plans amid market volatility, but like QBE, it remains within its full-year hazard allowance and has reaffirmed its operational guidance.
Despite the volatility, insurers have benefited from resilient investment returns. QBE’s investment income for the four months to April reached $410 million, with funds under management increasing to $31.6 billion. Its portfolio remains conservatively positioned, management said, with performance through recent capital market fluctuations described as “pleasingly resilient.”
Still, industry leaders argue that market performance alone won’t solve Australia’s deepening insurance affordability problem. Without structural tax reform and meaningful investment in mitigation, the risks to households, businesses and the economy will continue to climb.
For brokers and underwriters, many stakeholders say premium pressure is unlikely to ease until governments rebalance the policy toolkit and reconsider how risk is shared across the economy.
