According to The Australian’s report, market analysts expect the combined impact of recent catastrophes and broader claims inflation to flow through to upcoming renewals, particularly in motor and home portfolios, as insurers work to manage loss ratios and capital requirements. In a client note, Morgan Stanley analyst Richard Wiles said the latest round of extreme weather, including bushfires in Victoria and ex-Tropical Cyclone Koji in Queensland, is likely to weigh on first-half profitability and support further premium increases. Wiles cautioned that recent events are expected to “drive elevated pricing for new insurance policies and renewals,” with motor claims costs a key factor. The Insurance Council of Australia (ICA) has so far recorded 2,201 claims related to the Victorian fires and close to 900 claims linked to ex-Tropical Cyclone Koji, pointing to a growing volume of weather-related losses this summer.
Morgan Stanley’s analysis highlights a divergence in personal lines pricing. Sector-wide, motor premiums are estimated to be about 10% higher over the past year, while home insurance premiums have increased by around 3% over the same period, following several years of rate adjustments in both classes. For new business, the report identifies IAG and Allianz as among the most active in implementing motor rate increases, in contrast to Suncorp, which has reduced motor pricing in some segments. In home and contents, the pattern is reversed, with IAG easing rates while Suncorp has applied some of the larger price rises in the market.
Looking ahead, Wiles said Suncorp is targeting gross written premium growth of about 4% over the coming year, while IAG is expected to achieve around 7.5% growth. He also noted industry feedback indicating pressure on IAG’s organic customer growth, including reports of market share losses for its Victorian brand RACV. Pengana Capital fund manager Rhett Kessler characterised IAG as comparatively well placed to manage pricing and catastrophe volatility, describing it as an “earnings machine.” He added: “Suncorp, they have more volatile earnings.” Kessler pointed to IAG’s reinsurance structures, which he said demonstrate the value of risk sharing through premium and loss participation. He added that while customers are experiencing sizeable premium increases, the insurers’ underlying cost base is likely rising more slowly.
As pricing and portfolio settings evolve, both IAG and Suncorp are managing active responses to ongoing natural hazard events. IAG has been supporting customers affected by the Victorian bushfires since early January. After the ICA escalated the situation to an insurance catastrophe, IAG established a mobile claims centre in Seymour to provide in-person assistance. Customers can access temporary accommodation, emergency financial assistance, and claims support, including those without power or reliable communications. IAG executive general manager of claims Luke Gallagher said the group’s initial focus is on immediate safety and support as conditions develop. “Our Major Event Response Teams have begun property assessments, and emergency repairs to help people impacted by these terrible bushfires to get back on their feet as quickly as possible,” Gallagher said.
The group has also deployed teams at recovery centres in Castlemaine, Skipton, and Natimuk and is using RACV-branded response vehicles to assist customers across its portfolio of brands. In Far North Queensland, IAG is monitoring the impacts of ex-Tropical Cyclone Koji as it tracks inland after weakening before crossing the coast between Ayr and Bowen. IAG meteorologist and senior weather risk analyst Kathryn Turner said the system continues to carry flood risk for communities in and around Mackay. “IAG is closely monitoring rainfall around the southern side of the tropical low, which presents the possibility of flash flooding for communities in and around Mackay," Turner said.
Suncorp has provided an update on its 1H26 natural hazard experience and investment performance ahead of its half-year results in February. The group’s full-year FY26 natural hazard allowance remains at $1.77 billion. For the first half, Suncorp expects natural hazard costs of about $1.319 billion, compared with a half-year allowance of $866 million. The period included nine individual events with net costs above $10 million, covering hail and storm outbreaks in Queensland and the eastern states, as well as a significant storm event in New Zealand.
As of 6pm AEST on Jan. 11, Suncorp had received around 80 home and motor claims from ex-Tropical Cyclone Koji and about 60 claims from the Victorian bushfires. Chief executive Steve Johnston said Suncorp’s mobile disaster response hubs, assessors, and builders will enter affected communities when conditions are safe. “We ask everyone to continue to put safety first, remain alert, and listen to warnings and advice. Stay away from impacted areas – particularly if there has been flooding or where active bushfire alerts remain. Our thoughts are with the communities impacted, including Longwood in Victoria where there was a tragic loss of life,” Johnston said.
Johnston said the hailstorms that struck parts of the east coast, especially south-east Queensland in October and November, had resulted in more than 37,000 home, motor, and commercial claims. Johnston said Suncorp’s disaster management centre and mobile hubs, along with a pop-up motor assessment centre that processed more than 4,000 vehicles over two weeks, have been central to managing the claim load. The elevated event activity is expected to contribute to a higher risk adjustment in Suncorp’s claims reserves, with the group signalling an increase of about $35 million compared with 1H25. While this will lift reported net incurred claims, Suncorp said the adjustment does not affect its underlying margin.
Higher interest rates are providing some offset to the claims burden for Suncorp and the broader sector. Suncorp expects net investment income of around $250 million for 1H26, comprising approximately $160 million on insurance funds and about $140 million on shareholder funds. The exit yield on insurance funds at Dec. 31, 2025, was 4.8%. Morgan Stanley’s Wiles said improved investment income and, in some cases, lower reinsurance costs should help support industry margins despite the recent sequence of catastrophe losses. However, with the Victorian bushfires designated an insurance catastrophe and bushfire risk still elevated across Victoria, New South Wales, and South Australia, he indicated that further pricing action across personal lines remains likely as insurers continue to adjust portfolios through 2026.
