Brokers placing business in bushfire-exposed postcodes face a tightening window before summer, with pre-season policy embargoes, constrained capacity, and a growing protection gap converging as Victoria enters another high-risk fire season.
RACV Insurance has disclosed a 20-fold year-on-year increase in bushfire-related claims, with last summer’s fires accounting for more than 80% of all its bushfire-related property and vehicle claims over the past five years. The figures were released alongside the Australian and New Zealand Council for Fire and Emergency Services (AFAC) Seasonal Bushfire Outlook for Spring 2026, which identifies parts of the state as facing increased fire potential.
The AFAC outlook flags East Gippsland, the Surf Coast, and areas to the far south-west of Geelong as higher-risk zones. Emergency Victoria said a scenario of multiple large campaign fires starting as early as October is plausible, driven by prolonged dryness and dead vegetation in forested areas.
Read more: Victoria bushfire losses now estimated at $810 million
The Insurance Council of Australia (ICA) declared an Insurance Catastrophe on January 16, 2026, covering 18 local government areas. By late January, more than 3,100 claims had been lodged across property, motor, commercial, and business interruption lines, with about 30% of property claims classified as total losses. By May, the count exceeded 4,700.
PERILS, the catastrophe data provider, put total insured losses at $860 million in its July 2026 update, up from an initial estimate of $786 million. Commercial lines property accounted for 68% of losses, personal lines property 30%, and motor hull 2%.
Approximately 400,000 hectares burned, with about 900 buildings destroyed, including more than 330 homes, and more than 23,000 livestock lost.
The soft market conditions across commercial property lines have not extended to catastrophe-exposed risks. Some bushfire-zone risks are only 20% to 30% placed, with underwriters reluctant to write full limits despite broader rate declines.
The ICA has warned that some insurers may impose temporary embargoes on new policies or increases to cover once extreme weather is imminent. For brokers, that makes the weeks before summer the practical deadline for addressing underinsurance and coverage gaps.
Read more: Victoria bushfires expose commercial lines concentration
The Australian Prudential Regulation Authority’s (APRA) Insurance Climate Vulnerability Assessment (CVA), published in March 2026, estimated that about 15% of Australian households, roughly 1.4 million, are likely uninsured. That figure could reach 25% by 2050.
The gap is steeper outside capital cities. About 25% of rural households are uninsured now, rising to more than 40% by 2050, according to APRA. Home insurance premiums grew an average of 7.2% per year between 2010 and 2025, more than double the 3.1% annual wage growth over the same period.
APRA projected that annual bushfire losses of about $500 million will grow faster than cyclone losses, with the two perils combined exceeding $1.4 billion by 2050.
The Bureau of Meteorology (BoM) has confirmed an active El Nino. Emergency Victoria said it is on track to become the strongest such event in the modern era, bringing hotter and drier conditions across the state.
ICA deputy CEO Kylie Macfarlane said: “Recent years have taught us that extreme weather doesn’t always follow the forecast or the season.”
About half the home insurance market now recognises certified bushfire mitigation through the Resilient Building Council’s (RBC) Bushfire Resilience Rating scheme. Participating insurers have cut the bushfire component of premiums by up to 60%, with total premium reductions of 5% to 21%.
No equivalent certified pathway exists for commercial or strata properties, leaving brokers without a comparable tool for business clients in high-hazard areas.
RACV general manager of insurance and roadside Bill Bloodworth said policyholders in bushfire-prone areas should review their cover before summer.
“With bushfire season approaching, it’s a timely reminder for RACV Insurance policyholders to check that their home, contents and motor insurance policies are current and understand what their policies cover,” Bloodworth said.
For brokers, the practical takeaway is that the pre-season window to review sum insured levels, test placement capacity, and discuss mitigation options with clients in fire-prone regions is closing. AFAC is expected to release its national summer outlook in the coming weeks.
