IAG chair Tom Pockett (pictured left) has cautioned that the insurance sector is facing sustained cost pressures from more frequent and severe weather events, compounded by rising reinsurance expenses and affordability concerns.
Addressing the Australian Institute of Company Directors’ Climate Governance Forum, Pockett noted that since 2020, Australia has recorded 14 declared catastrophes and eight other major weather events, generating $22.5 billion in insured losses. That figure represents a 67% increase compared with the previous five-year period.
The 2022 floods across northern New South Wales and South East Queensland were the largest insured event globally in that year.
In the last financial year, Australian insurers issued 86 million policies and paid $50 billion in claims, with $22 billion related to home and motor policies.
According to Pockett, the impacts are not limited to domestic events. Global catastrophe losses reached about $100 billion in the first six months of 2025, compared with $71 billion in the same period last year, affecting the cost of reinsurance purchased by Australian carriers.
Pockett said climate considerations are a regular part of board discussions at both IAG and property group Stockland, which he also chairs.
Those discussions cover risk assessments, strategy approvals, integration of climate targets into executive incentives, and compliance with evolving disclosure standards.
Pockett said physical climate risks outweigh transition risks for both organisations. IAG’s operations focus on recovery and resilience after events, while Stockland works on developing and maintaining assets capable of withstanding climate impacts.
Both are examining the implications of premium affordability, particularly in higher-risk locations.
Initiatives include training staff to assist customers affected by disasters and advocating for mitigation measures such as building code reforms, restrictions on development in high-risk areas, and reductions in state-based insurance taxes, which can account for up to 40% of a premium.
IAG has entered renewable energy supply agreements, expanded its low-emissions vehicle fleet, and supported community risk-reduction initiatives.
Stockland has rolled out rooftop solar systems, lower-carbon construction materials, and supply chain engagement to cut emissions.
Both organisations are also highlighting labour shortages as a factor that can slow recovery after catastrophes, pushing up repair costs and impacting claim settlements.
The sector outlook aligns with findings from the latest Willis Natural Catastrophe Review, which projects global insured losses from natural disasters to surpass $100 billion in 2025 for the seventh year in a row.
The report identified the January wildfires in Los Angeles as the costliest wildfire on record, with insured losses exceeding $40 billion.
Other events this year include severe wildfires in Japan and South Korea, a record US tornado season, Australia’s first cyclone landfall near Brisbane in five decades, and unprecedented wind speeds in Ireland.
