Why are insurance premiums increasing in Australia?
Short answer
Insurance prices in Australia rose 47.0% over the five years to the September quarter 2026, compared with 24.6% for overall consumer prices.
Regulators and industry bodies report higher claims costs, large natural disaster losses and higher reinsurance costs as pressures on premiums.
What regulators and industry bodies report
Claims costs
ABS prices for new dwellings rose 41.3% over the five years to the September quarter 2026, and prices for vehicle maintenance and repair rose 27.4%. Insurers told the ACCC that building material and labour cost inflation is one of the factors behind high premiums (ACCC 2025). The ACCC’s final report found that claims cost inflation and extreme weather events are pushing premiums higher across Australia (ACCC 2026).
Natural disasters
The Insurance Council of Australia reported $7.17 billion in insured losses from more than 300,000 claims across the 2022 flood events (Insurance Council of Australia 2023). See How do natural disasters affect insurance premiums?
Reinsurance
The Actuaries Institute found that home insurance premium increases in the year to March 2024 were primarily a consequence of higher reinsurance costs during 2023 (Actuaries Institute 2024).
After insurers joined the government-backed cyclone reinsurance pool, the ACCC found that average home insurance premiums per $100,000 sum insured in higher cyclone risk areas fell by 11% in the first year. In areas with no cyclone risk they rose 6%. Up to two years after insurers joined, premiums in higher-risk areas were 14% below pre-pool levels. Insurers are passing on the lower reinsurance rates to policyholders in higher cyclone risk areas (ACCC 2026).
Capital, taxes and levies
Insurers must hold capital against the risk of large losses, and the cost of that capital is part of the cost of insurance. Insurers also pay expenses, commissions, taxes and levies, and often pass these costs on to policyholders (Huang 2024).
Competition and pricing strategy
ASIC found that 31% of car insurance customers who contacted their insurer about a renewal obtained a lower premium without changing their cover (ASIC 2026). Pricing that takes account of how likely a customer is to shop around, known as price optimisation, is legal in Australia (Huang 2024).
Data and risk modelling
The ACCC’s Northern Australia Insurance Inquiry found that better access to data, and more sophisticated analysis of it, has enabled insurers in northern Australia to price risk at an individual address level, not at a postcode or regional level, particularly for cyclone and flood risk. This has resulted in very large premium increases for some customers, while lower-risk customers may have seen reductions (ACCC 2020, ix). In one case, an insurer’s move to address-level cyclone pricing raised one customer’s premium by 70%, from about $3,000 to $5,000, and lowered another’s by 21%, from about $1,900 to $1,500 (ACCC 2020, 65).
With AI and big data, insurers can estimate the risk of each property more accurately. This more individualised pricing can lead to higher premiums for properties with higher risk levels (Huang 2024).
ABS figures: ABS, Consumer Price Index, Australia (Data API, dataflow CPI), original series, retrieved 3 November 2026. Last reviewed 3 November 2026.