Australia’s Insured Catastrophe Losses Hit 20-Year Low, Insurance Insights.
Australia’s insured catastrophe losses have dropped to their lowest levels in two decades. Learn what this means for insurance premiums, underinsurance risks, and how Business Insurance Consulting can help protect your assets.
Australian Catastrophe Losses at Historic Low, But Risks Remain
Australia’s insured catastrophe losses dropped dramatically last year, reaching their lowest levels since 2004, according to Aon’s latest Climate and Catastrophe Insight report. In a notable break from decades of severe weather events, Australia experienced no officially declared catastrophe events in 2024, marking the first catastrophe-free year recorded by the Insurance Council of Australia (ICA) since 1982.
However, despite this welcome news, experts warn Australians not to become complacent. Climate risks, underinsurance, and premium affordability remain critical issues that still demand attention. At Business Insurance Consulting, we help Australians navigate this changing insurance landscape, ensuring that homes, businesses, and personal assets remain adequately protected against future events.
A Welcome Respite from Extreme Weather Events
The sharp reduction in insured catastrophe losses, from more than $3.6 billion in 2023 to just $500 million in 2024, is significant. As Aon’s Asia-Pacific head of climate analytics, Tom Mortlock, highlighted, the previous years saw record-high insurance losses, making last year’s decline particularly notable.
Australia and New Zealand’s catastrophe-free year contrasts sharply with the global picture, where insured losses from natural disasters soared to approximately US$145 billion (AU$224 billion), making it the sixth-costliest year globally. Major international events, such as Hurricane Helene in the United States, the Noto earthquake in Japan, and severe flooding in Spain, underscore the ongoing global vulnerability to extreme weather events and natural disasters.
This temporary drop in catastrophe events in Australia, while reassuring, doesn’t mean Australians should relax their vigilance. Past events such as the catastrophic bushfires, devastating floods, and intense storms remain stark reminders of our vulnerability.
Why Australians Shouldn’t Become Complacent
While the significant decrease in insured losses offers temporary relief to policyholders and insurers, it’s essential to recognise that climate risk remains a substantial and growing threat. Experts predict that climate change will continue to increase both the frequency and severity of weather events, even if last year was unusually quiet.
The risk of complacency is substantial, particularly given that Australia continues to struggle with underinsurance and affordability issues for premiums. Aon’s Dr Mortlock notes that many Australians remain underinsured, unaware that their coverage may be insufficient to fully cover the costs of rebuilding after significant damage or loss.
Further, despite the recent reprieve, insurance premiums are not necessarily declining. Due to past disasters and ongoing risk reassessments, many Australians continue to experience rising premiums. As extreme events become more intense and frequent in the years to come, maintaining affordable insurance will remain a significant challenge.
Underinsurance: The Hidden Risk
One of the primary concerns highlighted by the Aon report and other industry analysts is the widespread problem of underinsurance in Australia. Many Australians underestimate the actual cost of rebuilding their homes or businesses after a disaster. Rising building costs, inflation, and increased regulatory requirements following a disaster often render previously adequate coverage insufficient.
Underinsurance can leave Australians exposed to significant financial hardship after even a modest disaster. Despite fewer catastrophic events last year, the risk of severe loss due to inadequate coverage remains a very real concern. Policyholders must regularly review their coverage limits to ensure that their policies accurately reflect current market conditions and actual rebuilding costs.
At Business Insurance Consulting, we actively guide our clients through this process, providing them with tools, market insights, and expert advice to ensure their insurance coverage remains accurate, comprehensive, and cost-effective.
Rising Insurance Premiums: Why Costs are Still High
Even with fewer catastrophic events, insurance premiums have not shown signs of a substantial decline. Past losses, especially the record-breaking $3.6 billion in insured catastrophe losses in 2023, have a lingering impact on insurers’ premium calculations.
Insurance providers must balance the risks they carry, which are influenced not just by immediate events but also by long-term trends and climate projections. The global reinsurance market also affects Australian premiums. Events like Hurricane Helene in the US and severe floods in Europe increase global reinsurance costs, which in turn trickle down to Australian policyholders.
As a result, premium affordability remains a critical challenge for both residential and commercial insurance buyers. It highlights the importance of working with specialists, like Business Insurance Consulting, who can leverage market access and expert negotiation to secure comprehensive yet affordable coverage.
Investing in Resilience: A Long-Term Solution
Aon’s Climate and Catastrophe Insight report emphasises that resilience-building remains key to managing future risks. Investments in mitigation measures—such as storm-resistant construction, improved drainage systems, and wildfire risk management—can significantly reduce damage from future events and ultimately lower premiums.
Australian homeowners, businesses, and insurers alike need to prioritise resilience and mitigation strategies as core components of their risk management plans. Government incentives and industry collaborations aimed at enhancing resilience can also play a crucial role in ensuring that insurance remains affordable and accessible.
Business Insurance Consulting can assist policyholders by recommending proven risk reduction strategies, negotiating better premiums, and ensuring coverage aligns with real-world threats. We help clients understand their vulnerabilities, make informed decisions, and adopt proactive strategies to protect their assets.
How Business Insurance Consulting Helps You Prepare
At Business Insurance Consulting, we understand that insurance is not just a financial safeguard but an integral part of overall risk management. Our tailored approach ensures you have the right level of protection without overpaying for unnecessary cover.
We provide:
- Customised Risk Assessments: Ensuring your insurance matches your unique circumstances and potential risks.
- Access to Leading Insurers: Securing competitive premiums through extensive market knowledge and strong insurer relationships.
- Expert Claims Advocacy: Providing professional support and streamlined claims processing when you need it most.
- Ongoing Reviews: Regular policy updates to reflect changes in the insurance market, your assets, and evolving risks.
Our commitment to transparent, expert advice gives clients peace of mind, knowing they have comprehensive cover in place for whatever the future may hold.
Building Protection into Your Future
Last year’s historically low insured catastrophe losses provide welcome breathing room for Australians, but should not encourage complacency. Climate change continues to affect the intensity and unpredictability of weather events, making it essential to ensure adequate insurance coverage.
The recent reprieve provides an ideal moment to review your insurance arrangements. Working with Business Insurance Consulting ensures you’re adequately covered for future uncertainties, with a tailored insurance strategy built on careful risk assessment, resilience planning, and cost-effective coverage.
Act Now: Secure Your Protection Today
Don’t wait until disaster strikes again. Contact us today for a comprehensive review of your insurance needs. Let us help you build robust protection that secures your assets, maintains your financial stability, and brings you peace of mind, no matter what the future holds.
Your future deserves robust protection. Let us help you secure it.