If you spent 2024 fielding angry calls about premium renewals, the industry's profit figures released that year may have felt like a provocation. The numbers were stark: AUD 6.1 billion in after-tax profit across Australian general insurers, against a five-year average of AUD 2 billion. Home insurance premiums averaged AUD 1,277 nationally - up 19.3% in a single year. Over five years, the cumulative increase in home premiums reached 51%.
The clients who called you during that period wanted an explanation. Why are premiums this high if the industry is this profitable? It is a reasonable question, and the answer matters - not just because it helps you manage those conversations, but because understanding the cycle you just lived through is the single most useful lens for navigating what comes next.
The short version: a large portion of 2024's profit was timing, not structural improvement. Knowing what drove it tells you exactly what to watch for as conditions shift.
Three things converged to produce the 2024 result. Pull them apart and the picture changes considerably.
The biggest factor was weather - or rather, the absence of it. Natural hazard losses came in at AUD 566 million across 49,000 claims in 2024, down from AUD 2.356 billion across 143,900 claims the year before. No weather event crossed the threshold for declaration as a catastrophe across the full year. That hasn't happened in years.
Here is why that matters to you specifically: insurers embed natural hazard allowances into every premium - provisions for the long-run average cost of weather events, collected regardless of whether a bad year occurs. In 2024, those provisions were largely unspent. The difference between the allowance embedded in your clients' premiums and the actual losses incurred went straight to insurer profit. In economic terms, your clients prepaid for catastrophe risk that did not arrive in 2024. They will pay again in 2025 and beyond, and some of that cost has already arrived: Cyclone Alfred alone generated more than AUD 1.5 billion in insured losses in early 2025, and total industry catastrophe losses for 2025 are running close to AUD 3.5 billion.
The second factor was premium volume. Three years of rate hardening had built a significantly higher premium base - AUD 68 billion in GWP in 2024, up from AUD 65.5 billion the prior year. Higher premiums flowing through at the same time as historically low claims produces outsize underwriting margins. That combination - the hard market's pricing and a benign claims year - is not a steady state. It is a point in the cycle.
The third factor was investment income: AUD 3 billion, nearly triple the prior five-year average, reflecting higher interest rates on the float insurers hold between collecting premiums and paying claims. Interest rates have been moving since then.
The 2024 profit result was the peak of the hard market cycle. You are now in the early stages of softening, and the numbers confirm it.
Across commercial lines in Australia and the Pacific, property rates fell approximately 10–20% through the second half of 2025. Casualty pricing declined around 7% over the same period. D&O, where the hard market ran particularly long, has been falling consistently. Cyber remains competitive. Marsh, Aon, and local broker groups are all reporting broadly the same story: capacity has returned, insurers are competing for good risks, and buyers with clean loss histories and strong risk management practices are getting meaningful relief at renewal. “It's probably the most dramatic change that I've seen in my 25-year career,” Alan Brett, commercial underwriting director at Australasia Underwriting told Insurance Business. “It's probably the most dramatic change that I've seen in my 25-year career,” he continued.
This is good news for your clients. It is more complicated news for your brokerage.
When premiums fall, commission income falls with them - assuming you're working on percentage-based remuneration. A 15% reduction in a client's property premium is a 15% reduction in your commission on that line, even if the work involved in placing it was identical. Across a commercial book that has grown in premium volume through the hard market, even moderate softening creates revenue headwinds. The brokerage industry's GWP has grown at roughly 6% annually over the past five years according to IBISWorld; that rate of growth almost certainly moderates as the premium base contracts.
The question for every principal is the same: how do you protect margin when the top line is shrinking through no fault of your own?
The most direct practical consequence of five years of premium growth for brokers isn't the softening cycle. It is underinsurance - and it is an exposure that sits in almost every book.
When premiums were rising sharply, a percentage of clients responded by reducing sums insured, removing optional extensions, or simply not updating declared values to keep their renewal costs manageable. Replacement costs for residential and commercial buildings have risen materially over the same period - driven by construction inflation, supply chain disruption, and the increased cost of skilled trades. A building insured for AUD 800,000 in 2021 may cost AUD 1.1 million to rebuild in 2026.
The Vero SME Insurance Index, published by NIBA in late 2025, found that most businesses do not fully understand the consequences of underinsurance. Over 180 broker conversations analysed in industry research from the same period touched specifically on underinsurance anxiety - clients asking whether they had enough cover, not just whether the premium was competitive.
This creates both a risk and an opportunity for you. The risk is straightforward: a client whose building is insured for 70% of its replacement value and suffers a total loss will come back to you asking why. Even if the underinsurance was the client's choice, the conversation that follows is not one you want to have. The opportunity is equally clear: a proactive review of sum insured adequacy, scheduled as a standard part of your renewal process rather than a reactive exercise after a loss, is one of the clearest value-adds a broker can offer that comparison websites and direct channels cannot replicate.
If you have not run a systematic underinsurance review across your book in the past twelve months, the case for doing it now is strong. Soft market conditions mean clients are more open to the conversation - the premium isn't going up, so you have their attention for something more substantive.
The 51% cumulative rise in home insurance premiums over five years has produced a structural problem that softening in commercial lines will not solve for a significant segment of your personal lines and SME client base.
APRA's Insurance Climate Vulnerability Assessment, published in March 2026, found that approximately one in seven Australian homes is currently uninsured, and projects that figure could reach one in four by 2050. The affordability threshold used in the CVA - four weeks of household income - is being breached by a growing number of households in cyclone, flood, and bushfire-exposed areas. These are disproportionately rural and regional clients.
For brokers with books that include exposure in northern Queensland, coastal Northern Territory, or flood-prone river towns in New South Wales and Victoria, this is not a theoretical future problem. It is a current one. Some clients in those areas are already finding that the premium required for adequate cover consumes a meaningful portion of their disposable income. Some are reducing cover. Some are dropping out entirely.
The cyclone reinsurance pool has helped - average premiums in medium-to-high cyclone risk areas fell approximately 11% after all large insurers joined the pool, with reductions of around 15% in Mackay, Cairns, and Townsville. But the ACCC's July 2025 monitoring report found that premiums in northern Australia remain very high, that affordability concerns persist, and that no new insurers have entered those markets since the pool's introduction.
Where does this leave you? Clients who are genuinely struggling to afford adequate coverage need honest advice about the trade-offs - not just the cheapest quote available. The gap between what they can afford and what adequate coverage costs is sometimes unbridgeable without government intervention. Your role in those conversations is to document the advice you gave, ensure clients understand what coverage gaps they are accepting, and flag where parametric or alternative products might provide partial protection. You cannot solve a structural affordability problem, but you can manage your own liability and give clients enough information to make an informed choice.
The record profit year matters to you for one more reason: it tells you where insurer appetite is now and where it will be over the next two or three years.
Insurers who have rebuilt capital and restored margins are in growth mode. That is precisely why commercial premiums are softening - carriers are competing for market share from a position of strength, not desperation. For brokers, this translates to insurer flexibility: on pricing, on coverage terms, on capacity for difficult risks, and on the speed and quality of engagement with submissions.
The corollary is equally important. The 2025 claims year - with Cyclone Alfred, the winter bushfires, and a sequence of east coast flood events - means that 2025 results will be materially weaker than 2024. If natural hazard losses continue at elevated levels in 2025–26, the soft market could be shorter than the one that followed the 2011 Queensland floods. The insurance clock is moving; the question for your planning is how fast.
Bellrock Advisory's January 2026 market analysis placed the clock at around 3:30 - a period of moderating premiums and increased competition, but with early signals of consolidation from major insurers that typically precede a turn. D&O is likely to be the earliest line to harden again, driven by increased regulatory scrutiny and rising shareholder derivative actions. Construction and casualty are watching deteriorating loss trends. Personal lines, where the affordability issue is structural rather than cyclical, will not soften in the way commercial lines have.
Timing the turn is less important than being ready for it. The brokers who will come out of the soft market in the strongest position are those who have used the window of insurer flexibility to lock in better coverage terms and structures for their clients - not just chased lower premiums. When the market hardens again, the clients with well-structured programmes and documented risk management practices will get the best outcomes. The ones who took a price-only approach during the soft market will be the most exposed when capacity tightens.
The macro picture translates into a reasonably clear set of near-term priorities for brokers managing Australian commercial and personal lines books.
Underinsurance reviews are the highest-value use of the window you currently have. Clients are receptive when premiums aren't rising. Use the soft market to have the harder conversation about whether their sums insured still reflect reality. A valuation update now is far easier than a claim dispute later.
Lock in coverage improvements, not just premium reductions. When you are negotiating renewal in a soft market, push for broader policy terms, improved sublimits, reduced exclusions, and better claims handling commitments - not just a lower number. The premium will harden again. The coverage improvements, if you get them embedded in the policy wording, are stickier.
Audit your high-hazard clients for affordability risk. If you have clients in cyclone, flood, or bushfire-exposed areas who are reducing sums insured or dropping optional covers to manage premium cost, document those conversations carefully. Your liability exposure in a total loss scenario is material if advice was not given or was not recorded.
Use the D&O window before it closes. The current soft market in D&O is an opportunity for clients who have been paying hard-market rates to restore coverage to where it should be. The regulatory environment - ASIC enforcement, the new mandatory merger regime, increased sustainability disclosure obligations - means D&O exposure for Australian company directors is rising even as premiums are falling. That combination won't last.
Build the renewal narrative now for when the market turns. The clients who will renew smoothly in a harder market are those who can demonstrate risk management maturity, loss control investment, and claims discipline. Help your clients build that story now, before they need it.
