The cost of insuring an Australian home is going up significantly, repeatedly and for the foreseeable future. That was the blunt message from the country's biggest insurers at an industry summit in Sydney, where executives, regulators and government ministers gathered against a backdrop of mounting pressure on affordability, accountability and the future of the market itself.
Insurance Australia Group (IAG) CEO Nick Hawkins (pictured) made it clear there is no near-term relief in sight. Construction cost inflation, skilled labour shortages and the compounding effects of climate risk have created a pricing environment that brokers and their clients will need to plan around, not wait out.
For brokers managing commercial and personal lines renewals, the message from the AFR Insurance Summit on Tuesday, was unambiguous: premium relief is not coming and the regulatory environment around how those increases are communicated is about to get considerably more demanding.
At the core of the premium pressure is the rising cost of rebuilding. Hawkins told the summit that intense cost pressures on construction had exposed home insurance to "double-digit [premium growth] for some time" and that this would not ease until "our country can really address some of these property inflationary pressures."
That statement strongly signals this is not a temporary market condition but a structural pricing shift tied to forces - construction inflation, climate frequency, reinsurance costs - that are not currently show signs of resolving.
The pressures are well documented. The Australian Climate Service has projected that the annual cost of natural disasters, including floods, bushfires and tropical cyclones, could reach $40 billion by 2050. That figure is nearly ten times the average annual insured loss recorded between 2019 and 2024, which was itself 67% higher than the five years before that. The trajectory is steep, and insurers are pricing accordingly.
Suncorp's consumer insurance chief Lisa Harrison pointed to lengthy delays in building approvals and a shortage of skilled tradespeople as factors pushing rebuilding costs higher. She noted that regulatory compliance alone was adding approximately $200,000 to the cost of building a home in a major city - a figure that flows directly into replacement sums insured and, by extension, premiums.
A separate geopolitical pressure has emerged this year. The conflict between the United States and Iran contributed to a spike in building material prices, with Barrenjoey warning in April that the cost of new houses and renovations could be running at close to 6% by September.
The summit made equally clear that the pressure on insurers is not only coming from costs - it is coming from Canberra and from the regulator, both of whom want better answers for consumers when premiums move sharply.
The Australian Securities and Investments Commission (ASIC) commissioner Alan Kirkland used the occasion to put the industry on notice over the reworked General Insurance Code of Practice (The Code), currently under review. Kirkland said that when ASIC comes to make its approval decision, it will weigh how closely the revised code reflects the recommendations of the 2022 parliamentary flood inquiry and how far apart industry and consumer stakeholders remain.
Financial Services Minister Daniel Mulino, who has been a consistent voice on pricing transparency since chairing that same parliamentary inquiry, floated a "traffic light system" that could flag major hazard risk on individual policies to help customers understand why they are paying what they pay.
"We as government, as regulators, as industry, as consumer groups, we're all going to need to work together to figure out a way in which we can do a better job of providing a layered understanding for policyholders of what it is that's driving the level of their policies," Mulino said.
For brokers this signals that the transparency conversation is not settled and that the regulatory and political framework around premium disclosure is still being shaped. Brokers who can already explain to clients - in clear, specific terms - what is driving their renewal pricing are ahead of a curve that the industry as a whole is still trying to get around.
IAG's Hawkins acknowledged the direction of travel, while cautioning against regulatory overreach. "It feels like risk is on," he said, "and I think the more industry can do around pricing transparency, the better."
The $1 billion Disaster Ready Fund remains the government's primary infrastructure response, though the industry has called for $30 billion over a decade to meaningfully reduce flood risk exposure. The gap between those figures tells its own story.
