The Insurance Council of Australia (ICA) has assigned its most senior industry committee to oversee the evolving effects of the Middle East conflict across all insurance lines, examining how cost inflation, supply chain disruption and travel interruption may affect Australian policyholders.
The ICA’s Board Strategy Committee, comprising senior executives from major insurers, has been tasked with tracking the conflict’s impact on general insurance classes and coordinating the sector’s response. Preliminary data from member companies indicates that higher fuel costs are increasing freight expenses and influencing the availability and price of materials and labour used in claims repairs. Insurers have reported increases of up to 36% for building materials, up to 30% for trades and on-site specialists, and up to 50% for freight. These changes are influencing home and motor repair timeframes and may affect claims costs and settlement patterns.
Following a recent board meeting, the committee was asked to work with member insurers on measures for customers facing financial pressure, including hardship assistance under the General Insurance Code of Practice. It will also lead engagement with governments and other industries to identify potential supply chain bottlenecks and consider options related to repair capacity and material supply. The ICA plans to increase communication with small and medium-sized enterprises, advising businesses to speak with their insurer or broker about coverage, sums insured, and whether adjustments are needed as input costs rise.
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At this stage, insurers have not reported a significant volume of claims that can be directly linked to Middle East-related supply chain disruption. The ICA is monitoring developments so that any emerging patterns in claims or repair delays can be shared across the market. The council has also noted the federal government’s four-stage framework – “plan and prepare,” “keeping Australia moving,” “taking targeted action,” and “protecting critical service” – and says it is working with the Australian government as policy responses are developed.
ICA CEO Andrew Hall said the sector is using structures familiar from its natural catastrophe work. “The insurance sector, as always through times of crisis, stands ready to work together with government to support Australians as supply chains cause further disruption and add cost pressures to customers and the operations of the industry. In the same way the ICA works when a natural catastrophe occurs, the board has tasked the industry’s most senior executives to monitor impacts and, as appropriate, coordinate the industry’s response,” Hall said. He added that the ICA “welcome[s] National Cabinet’s announcement on Monday around the staging of the impacts of the war on Australia, as we continue to work with state and federal governments to support Australians. If insurance customers have any concerns or believe they have a claim, they should speak with the insurer or broker in the first instance.”
In travel insurance, ICA members have increased resources for Australians affected by the conflict and by changes to global airline schedules. According to the ICA, travel insurers provide 24/7 contact channels for customers in affected areas, assist with the coordination of medical care where required, and give priority to those currently in or transiting through impacted countries. Member companies have also indicated that coverage dates on some travel policies will be extended for customers whose journeys have been disrupted by airport or airspace closures.
Policyholders who have experienced losses linked to the disruption are being encouraged to lodge a claim, even if they are uncertain how policy exclusions might apply. The ICA has noted that exclusions for war and conflict are standard features of many insurance products globally. Losses that are not related to war or conflict – such as many medical expenses and other insured events – remain subject to each policy’s terms, with claims assessed on their individual facts.
To centralise monitoring and data collection, the ICA has declared the Middle East conflict a Significant Event for travel insurance. Under the declaration, the council and its members are collecting and analysing claims information related to the event and sharing aggregated data with policymakers. The Significant Event declaration has led to the formation of an industry taskforce, structured claims data collection and analysis in consultation with member insurers, and ongoing work with the federal government and relevant agencies on a coordinated approach for Australians seeking assistance.
