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Amid Surging Profits, The Insurance Sector Faces Public Perception Hurdles

The general insurance industry's after-tax profits rose significantly to $7.3 billion last financial year, marking its strongest performance in over a decade, according to actuarial group Taylor Fry.

This impressive outcome was driven by lower-than-expected losses from catastrophes and robust investment returns.

The previous year's figures, limited by accounting changes affecting data availability, saw comparable profits for nine months rising by 33% to $5.2 billion.

With the latest release of its annual Radar report, Taylor Fry anticipates that the surge in earnings will prompt heightened scrutiny on pricing practices and fairness in the industry, especially as consumers feel the pinch of affordability pressures. Principal Scott Duncan emphasises that examining insurance through a one-year lens is insufficient, given the industry's inherent volatility and the unpredictable nature of catastrophe experiences and investment returns.

Scott Duncan elaborates that insurance functions as an economic shock absorber, stabilising households and the broader economy. Taylor Fry's extended analysis of share prices indicates that the sector's performance aligns with the broader market over the past decade due to its risk absorption capacity.

Primary insurers reported a $6.7 billion profit last financial year, buoyed by previous premium hikes and reserve releases. The reinsurance sector also demonstrated resilience with earnings of $600,000, even as the market softened.

The household insurance line achieved its best service result in over a decade at $1.16 billion, despite a decline in risks written as consumers shift towards higher excesses to manage costs. The domestic motor sector thrived thanks to favourable claim results, overshadowing the concerns about supply chains not translating into increased claim volumes.

Meanwhile, the commercial property market is on a downturn, and the renewable energy shift is spotlighting risks associated with lithium-ion battery fires and solar panel hail damage. The rise in artificial intelligence adoption is another focal point as insurers aim for more efficient customer outcomes. The industry is now turning its attention to AI governance, data security, and cyber risk management.

Published:Thursday, 2nd Oct 2025
Source: Paige Estritori

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Insurance News

NRMA's Departure from Farm Insurance: What It Means for Australian Farmers

05 Oct 2025: Paige Estritori

In a significant shift within the Australian insurance landscape, NRMA has announced its withdrawal from the farm insurance sector, ceasing the sale of new policies as of July 1, 2025. This decision leaves many farmers seeking reliable alternatives to safeguard their livelihoods. - read more

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Surge in Farm Impact-Related Claims Raises Safety Alarms

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Rising Insurance Premiums for Farm Machinery Amidst Increasing Extreme Weather Events

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Australian farmers are grappling with a significant rise in insurance premiums for farm machinery, driven by the increasing frequency and severity of extreme weather events. Some farmers have reported that their insurance bills have more than doubled over the past few years, with annual premiums exceeding $100,000. - read more

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Knowledgebase

Term Life Insurance:
A type of life insurance policy that provides coverage for a specified period, such as 10 or 20 years.

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