According to KPMG's annual review, the average customer paid 19.3% more for home insurance coverage, with premiums rising from $1,070 to $1,277. Car insurance premiums also saw a 12% increase, climbing from $845 to $945. These increases have been a primary driver of the industry's enhanced profitability.
The year 2024 was characterized by fewer significant weather events, with only two notable incidents: the Valentine's Day storms in Victoria and severe weather in New South Wales and Queensland in April. These events resulted in $566 million in losses from 49,000 claims, a substantial decrease from the $2.356 billion paid out across 143,900 claims in 2023.
Scott Guse, a partner at KPMG, described 2024 as a "benign weather year" for insurers. He noted that the absence of major catastrophic events significantly contributed to the industry's profitability. Additionally, investment income played a crucial role, with insurers benefiting from favorable market conditions, adding another $3 billion to the profit tally.
For small to medium business owners and self-employed professionals, these developments have direct implications. The substantial increase in premiums can strain financial resources, making it essential for businesses to reassess their insurance needs and budgets. While the profitability of insurers suggests a stable industry, it also raises questions about the affordability and accessibility of coverage for businesses.
To navigate this landscape, businesses should consider the following steps:
- **Review Current Policies:** Regularly assess existing insurance policies to ensure they align with current business needs and risk profiles.
- **Compare Providers:** Shop around and compare offerings from different insurers to find the most cost-effective and comprehensive coverage.
- **Consult Professionals:** Engage with insurance brokers or advisors who can provide tailored advice and help negotiate better terms.
- **Implement Risk Management Strategies:** Proactively manage risks to potentially lower premiums, such as enhancing security measures or adopting safety protocols.
In conclusion, while the Australian insurance industry's robust financial performance in 2024 reflects effective management and favorable conditions, it also underscores the need for businesses to be vigilant and proactive in managing their insurance portfolios to ensure adequate protection without overburdening their finances.
