Premium increases helped the general insurance industry make a profit after tax of $5.2 billion last calendar year, KPMG says today in an annual review.

The consultancy says the result was “solid” despite falling from $6.2 billion in 2024, because last year was a “period with multiple weather events” including Ex-Tropical Cyclone Alfred and major storms in NSW and Queensland in November.

“Three catastrophes and three significant events saw the number of claims six times higher, and total losses seven times higher than those experienced in 2024,” KPMG said.

“Additionally, many events remained medium in size and therefore did not activate the catastrophic reinsurance protections that some insurers had taken out, further impacting the bottom line.

“This contrasts with 2024, when there were no catastrophic events and just two events categorised as significant.”

Insurers’ natural hazard payouts exceeded their planned allowances, with losses of $4.46 billion, compared with $585 million in 2024.

Alfred and the November storms in Queensland and NSW accounted for $3.05 billion of the loss tally last year.

Related article: Queensland bears brunt as wild weather losses surge

KPMG insurance partner Scott Guse says the 2025 profit was “driven by premium price increases … While there is understandably community concern around rising premiums, rate increases are being driven by the pricing of worsening disaster risk and persisting claims inflation.”

While there are concerns about the Iran war’s impact, Mr Guse says there has been “no noticeable change at this point” for insurers.

“There is an expectation that if it continues there will obviously be escalating claims cost through supply chain issues and inflationary aspects of certain products,” he told insuranceNEWS.com.au.

“But have we seen any evidence of it as yet? No, there is no tangible evidence or no material evidence of any change in claims cost or pricing or frequency at this stage.”

The economic fallout from the war may mean Australians “start to scale back on their level of coverage or start to push their excesses up considerably to save on their premiums”, Mr Guse says.

“I can see the insurance industry being impacted more through coverage which leads to underinsurance, and the level of excesses. That’s the way that policyholders will deal with it in this economic environment.”

KPMG’s review of the industry’s financial performance is based on data from the Australian Prudential Regulation Authority and Insurance Council of Australia.

The full review can be read here.

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