The California wildfires, multiple Severe Convective Storms (SCS) in the US, the Tibetan Plateau earthquake and the Myanmar earthquake in Thailand have resulted in aggregated insured losses in excess of US$53B in the first quarter of 2025. Notwithstanding, the second quarter has been comparatively quiet. Reinsurer Swiss Re have predicted global natural catastrophe losses will reach US$145B in 2025 based on a forecasted 5 to 7 per cent growth rate. Should we make it through the US Hurricane season (1 June to November 30) relatively unscathed and assuming this forecast is relatively accurate these losses will merely equate to another earnings impact and softening market conditions will continue. Clients unaffected by losses should expect reductions in the range of 5 to 10 per cent. Prudent buyers will reinvest these savings in risk management and property improvements, in particular updating their Risk Engineering Reports and carrying out capital improvements in line with any recommendations contained therein.
Closer to home
Since 31 December 2024 the RBA has reduced the cash rate by 0.50 per cent to 3.85 per cent and economists predict a further two or three cuts to this rate by the end of 2025. Whilst this will result in lower borrowing costs for insurers, it also reduces the return on long term investments.
The emergence of new managing general agents and underwriting agencies locally continues to generate competition as incumbent insurers look to retain their market share, which is positive for both consumers and businesses.
The Insurance Council of Australia (ICA) remains an advocate for a coordinated approach in establishing a 10-year, $30B Flood Defence Fund to protect Australians from the costliest of insurance losses. Around 1.4M properties face some risk of flooding, this figure includes almost 300,000 properties which face a severe to extreme risk of annual flooding, largely in NSW, QLD and VIC.
The reinsurance pool established for the North Queensland Cyclone by the Australian Reinsurance Pool Corporation (which also manages the terrorism pool), was designed to generate insurance premium affordability for housing and small to enterprise business assets. Reporting as at 31 December 2024 shows this is continuing to build momentum, however, insurance premiums continue to remain higher in northern regions than the south.
Continue reading our full range of market updates:
- Insurance Market Overview: July 2025
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- Motor
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- Renewable Energy
- Strata
- Claims
- Workplace Risk
- Executive & Professional Risk
- Construction
