Nearly 40% of claims from one of Australia’s most damaging 2025 weather events remained unresolved more than six months after it struck – a figure that sits at the centre of a widening industry debate about whether accelerating AI investment is outpacing the human and physical capabilities needed to resolve complex claims.
Extreme weather events generated almost $3.5 billion in insured losses from 264,000 claims across Australia in 2025, with five events declared significant or catastrophic by the Insurance Council of Australia (ICA). ICA Data Hub figures show that Cat 255 – the Queensland and New South Wales Severe Storms and Hail event – had generated 92,700 claims and $2.03 billion in incurred losses as of May 2026, with a closed rate of just 60.2% and $1.15 billion still outstanding more than six months after the storms struck.
The unresolved tail has produced a parallel complaints surge. The Australian Financial Complaints Authority (AFCA) received 111,373 complaints in the 2025 calendar year – a 14% increase on 2024 and the highest annual volume in AFCA’s history. Delay in claim handling was the most complained-about issue across all financial services, with 9,274 complaints. AFCA’s annual review identified claims handling delays as the top issue across all weather-related complaints and stated that, while large-scale events can cause unavoidable delays, dealing with natural disasters is not new for the general insurance industry – and that insurers are expected to have robust plans in place.
The complaints data arrives alongside a direct intervention from the prudential regulator. In April 2026, the Australian Prudential Regulation Authority (APRA) called for a step-change in how banks, insurers, and superannuation trustees manage AI-related risks, warning that governance, risk management, assurance, and operational resilience practices are not keeping pace with the scale, speed, and complexity of AI adoption. APRA did not introduce new standards but clarified that existing prudential obligations apply to AI deployment in full.
The industry's response to major catastrophe events has continued to rely heavily on physical engagement with customers. Following the North Queensland Floods, ex-Tropical Cyclone Alfred, and the Mid North Coast and Hunter Floods, the ICA and insurers held customer engagement events in Cardwell, Ingham, and Hervey Bay, established Insurance Hubs in Townsville, Taree, and Port Macquarie, and maintained an extended presence at recovery centres across Queensland and New South Wales.
That pattern has continued well into 2026. In April 2026, the ICA returned to Port Pirie – months after severe storms struck the region in late November 2025 – deploying a two-day hub where residents could meet face-to-face with multiple insurers to press existing claims, lodge new ones, and seek guidance on disputes. ICA director of mitigation and extreme weather response Liam Walter said the storms had left widespread damage and that the return visit was designed to support policyholders still working through the process. Suncorp separately announced plans to deploy its Mobile Disaster Response Hubs across 18 locations to support customers with complex outstanding claims from Alfred and subsequent storm events.
It is into this environment that Crawford & Company Australia has released a white paper, The Human Algorithm: Why Empathy, AI and Local Presence Will Define the Future of Insurance, arguing that as AI becomes more embedded in claims operations, local expertise, and physical presence become more strategically important – not less. The paper draws on insights from claims professionals across Australia to contend that AI handling of triage, research, administration, and communications can redirect professionals toward complex decision-making but cannot substitute for the community knowledge and face-to-face engagement required in the aftermath of major loss events.
That framing is broadly consistent with Deloitte Australia’s Insurance Predictions 2026, which identifies the “augmented claims professional” as a key 2026 trend, predicting that insurers will accelerate the deployment of AI, advanced analytics, and intelligent automation to build highly efficient, scalable, and more accurate claims functions – with human professionals redirected rather than removed. A 2025 joint report by CSIRO and the ICA reinforced the complementary framing, identifying automated claims processing as a priority AI use case while noting the transformation must be managed responsibly, with appropriate governance frameworks to protect consumer privacy and ensure equitable outcomes.
Jonathan Hubbard, president of Crawford & Company Australia, said the company’s position is direct. “The future of insurance isn’t a choice between technology and people. Our view is simple: people first, who are digitally enabled. Technology can help us work faster and more efficiently, but when someone has suffered a loss, local knowledge, human connection, and professional judgement still matter. The organisations that succeed will be those that use technology to support experienced people on the ground, not replace them,” Hubbard said.
Crawford, as a provider of outsourced claims management with a national physical network, has a direct commercial interest in that argument. What the 2025 data confirms independently is that the industry’s most consequential response mechanisms – Insurance Hubs, roving claims teams, and face-to-face consultations – remained physical. Whether that reflects the structural limits of automation or a transitional moment before more capable AI systems mature is the question the sector has not yet resolved.
