In a sweeping address delivered at the Insurance Business Claims Leaders Summit in Sydney by Kylie Macfarlane, chief operating officer for climate, operations and strategy at the Insurance Council of Australia (ICA) laid bare the seismic shifts underway in the nation’s insurance landscape, revealing a sector under pressure from climate disasters, community expectations, and a crisis of affordability. Yet the message was one of cautious optimism: the industry is learning, evolving, and, above all, determined to regain public trust.
Since 2022, Australia has endured seven declared catastrophes, with insurers paying out more than $3 billion in claims. The year 2022 alone, marked by the catastrophic flood event designated CAT 221, saw insured losses of $6.4 billion—Australia’s costliest weather disaster to date. That one storm generated nearly 250,000 claims and triggered what the ICA’s leadership described as a moment of existential reflection.
"The way we support customers during the claims journey becomes the ultimate test of trust," Macfarlane said, casting the industry’s role not just in financial terms, but as a custodian of the nation’s social fabric.
In response to public criticism and parliamentary scrutiny, the ICA commissioned an independent Deloitte review in 2023. Its findings set a new benchmark for catastrophe preparedness, urging improvements in governance, customer vulnerability management, and disaster data quality. A follow-up report in 2024 found that while some insurers had made “significant progress,” others lagged, struggling with aging technology and resource constraints.
More than 150 recommendations from the Deloitte review and multiple parliamentary inquiries have since been consolidated into a sweeping General Insurance Industry Action Plan, launched in March 2025. Of these, 109 have been accepted or accepted in principle, 28 require further study, and only three were rejected outright—those concerning pricing mechanisms, which the ICA warned could breach competition law.
"We’re mindful of how these changes affect affordability," Macfarlane said. "We don’t want reforms to drive premiums higher."
At the heart of the reforms is a recalibration of how the industry defines and supports vulnerability. A new industry-wide framework is under development to ensure equitable treatment of disaster-impacted customers, with the ICA asserting that vulnerability “shouldn’t be a competitive advantage.”
From pre-storm text alerts to the deployment of roving claims teams and town hall consultations, insurers have overhauled their disaster response playbooks. The cyclone season brought fresh tests: in 2025, insurers reached out proactively to more than 250,000 policyholders ahead of ex-Tropical Cyclone Alfred and reserved temporary accommodations for evacuees before the storm made landfall.
Innovations extended to workforce strategies, with the ICA issuing a call to skilled tradespeople from less-affected states like South Australia and Western Australia to aid in rebuilding efforts in Queensland and New South Wales. It was a first for the industry.
Yet, the ICA acknowledged that it is not only major events that demand attention. Localized disasters—like the Castleton hailstorm that damaged half the town’s homes—have underscored the need for tailored responses even in undeclared catastrophes.
Extreme weather has cost the industry an average of $4.5 billion annually over the last five years, a 67% increase over the prior period. Labour shortages and construction inflation have only worsened the situation, with the cost to build a home rising nearly 30% since 2019.
And then there’s tax: in 2023-24, states collected $8.6 billion in insurance-related levies—$3.5 billion more than the industry's collective profit. “Removing these taxes remains a priority,” Macfarlane said, “but ultimately, we must reduce the underlying risk.”
The platform also pushes for embedding resilience into Australia’s National Construction Code, arguing that buildings must survive—not just protect life during—climate disasters. The ICA proposes three-year code reviews and $2 million for research into future amendments.
Finally, the Council is calling for a radical rethinking of land use planning, noting that vulnerable communities are often those living in high-risk, under-insured areas. “Where we build and what we build matters,” Macfarlane said. “We’re putting people in harm’s way—and many can’t afford to protect themselves.”
The insurance industry, long cast as reactive, now finds itself at the forefront of Australia’s climate adaptation. While scars remain from the catastrophes of 2022, the industry’s willingness to scrutinize its failures—and act on them—offers a blueprint for resilience.
“Change is necessary, inevitable, and will ultimately benefit the industry,” the keynote concluded. “Because if we don’t evolve, we cannot build a more resilient Australia.”The event was produced by Insurance Business, with Event Partner Ambrose Construct Group Ambrose Construct Group (ACG) is Australia’s leading insurance building and restoration service provider, delivering superior claim outcomes in metropolitan, regional and rural areas nationally. We focus on timeliness, quality, cost and customer satisfaction. For more than forty years our group has provided residential and commercial solutions repair and restoration services for homeowners, businesses and their communities.”
