The general insurance industry’s strongest result in more than 10 years is no guarantee of future gains given the sector’s volatility, Taylor Fry says in its annual Radar report.

The $7.3 billion profit after tax for the year to June 30 builds on a strong year-earlier result, but it follows insurers being hit hard during covid and experiencing record natural disaster claims as severe bushfires were followed by the devastating east coast flooding. 

“Understandably, consumers may question the big result in a time of ongoing cost-of-living and insurance affordability pressures,” Taylor Fry principal Scott Duncan said. “But insurance is naturally a volatile business year on year, and it’s critical not to view profits solely from a one-year window.”  

Australian Prudential Regulation Authority data was available for only three quarters in 2023-24 due to accounting changes. Based on a comparable nine months to June 30, profits rose by one-third to $5.2 billion. 

Taylor Fry says that, taking a longer-term view, the share price of listed major insurers has matched the broader market, and the sector must ensure it can fulfil its role as a shock absorber for households and the broader economy.

For primary insurers, the latest result was buoyed by investment returns above historical averages, several years of double-digit premium increases and reserve releases across both long-tail and short-tail classes.

Return on capital for 2024-25 was 19%, up from a 14% annualised figure the previous year.

Mr Duncan says the householders segment recorded an insurance service result of $1.16 billion – its strongest in more than 10 years – but APRA data shows a continued decline in risks written, with evidence consumers are increasing excesses to offset cost-of-living pressures. 

See ANALYSIS.