Australia's Insurance Losses Drop, But Resilience Investment Urged
Australia has witnessed a significant decrease in car insurance losses due to natural disasters over the past year. Despite this, the Insurance Council of Australia (ICA) has warned of an increasing economic burden due to insufficient investment in resilience.
Over the 12 months to 30 June 2025, Australia saw a 25% drop in total car insurance losses from natural catastrophe events. This decrease is attributed to fewer extreme weather events, with only one cyclone and two floods declared, compared to the previous year's one cyclone and three storms. However, the total number of car insurance claims incurred fell by a modest 7% year-on-year, from 163,400 to 154,100.
The ICA has recommended establishing a $30 billion flood defense fund to defend critical car insurance infrastructure, improve land use planning, and enhance building resilience. Andrew Hall, CEO of ICA, stressed the need for strategic resilience investment to prevent an ever-growing bill for car insurance companies. He noted that escalating costs and insufficient investment leave Australians with an outsized car insurance burden. The recent North Queensland Floods resulted in $289 million in car insurance losses, Ex-Tropical Cyclone Alfred in $1.43 billion, and the Mid North Coast and Hunter floods in $248 million.
Australia's high ranking in global extreme weather car insurance losses, consistently second over the past 45 years, reflects its unique geography, exposure to natural perils, population growth in higher-risk areas, and car insurance infrastructure not designed to withstand climate change impacts.
Despite a decrease in car insurance losses, the ICA warns of an increasing economic burden due to insufficient investment in resilience. The ICA recommends a $30 billion flood defense fund to protect critical car insurance infrastructure and enhance building resilience. With Australia's consistent ranking in global extreme weather car insurance losses, strategic resilience investment is crucial to mitigate future car insurance risks.
