The Victorian bushfires are expected to add further upward pressure on insurance premiums, particularly in regional and high‑risk areas, as insurers absorb additional catastrophe losses on top of existing claims inflation in personal lines. In the central Victorian town of Harcourt, the experience of neighbouring homeowners illustrates a growing gap in insurance coverage between those able to maintain policies and those who cannot.
Roger Wilkinson’s 130-year-old weatherboard house, which he renovated himself and rented out, was reduced to a shell when fire moved through the area. He said his decision to keep paying for insurance, despite financial constraints, is now central to his ability to recover. “We’re insured because we made quite an effort to pay it. We have old cars; we don’t really have the best of clothes. It'll save us, thank goodness,” Wilkinson said, as reported by ABC. Nearby, 69-year-old pensioner David Jeffries also lost his home, but he had no cover in place after deciding premiums were unaffordable on a fixed income. “It was a choice I made, and if I had got [insurance], I would’ve had to hit those small little luxuries on the head. I think people have to understand there’s a lot of people in this position,” Jeffries said.
Local lawyer Zoe Edquist, based in Castlemaine, arranged for her elderly parents’ policy to be reviewed and the sum insured increased only weeks before a grassfire destroyed their property. The home was soon assessed and declared a total loss, and the family now has enough insurance proceeds to begin rebuilding, although not to fully replace all contents and improvements. For Edquist, the broader concern is the outlook for people in high‑exposure locations as premiums respond to repeated catastrophes. She said the affordability of insurance in the future was a “real worry” and warned that current trends “may also result in a lot of properties being uninsurable, and that’s not just here, but anywhere that’s got a realistic risk of flood or fire.” She has raised options such as targeted government subsidies or allowing premiums for high‑risk properties to be deducted from taxable income to help sustain coverage levels.
The Insurance Council of Australia (ICA) has escalated its earlier significant event declaration for the Victorian bushfires to an Insurance Catastrophe, covering fires affecting 18 local government areas since Jan. 7. Under the catastrophe declaration, insurers are giving priority to claims from affected policyholders, triaging files to direct urgent assistance to the most severely impacted, and deploying disaster response personnel and ICA representatives to recovery centres once emergency services deem conditions safe. “These bushfires have been devastating for many communities across Victoria, and insurer’s priority is getting help to people as quickly as possible. We acknowledge that a large recovery effort will be required to help the state recover from this catastrophic event, and insurers stand ready to support communities in this process,” said ICA deputy CEO Kylie Macfarlane.
The ICA reports that more than 2,600 claims have been lodged from the Victorian fires, with almost half relating to commercial risks, including farming operations. The council estimates that claims from declared weather catastrophes since September are expected to exceed $2 billion nationally once the latest bushfire losses are incorporated. ICA director of mitigation and extreme weather response Liam Walter said premiums do not usually change solely in response to one event, but total catastrophe costs remain a key input to pricing and capital planning. “Those are significant figures and insurers do need to account for that in their pricing, ultimately,” Walter said, as reported by ABC. He added that the council is not currently seeing signs of a broad withdrawal of capacity from bushfire‑exposed regions. “I think I can comfortably say there’s not going to be a disappearance of insurance all of a sudden, but [I would] absolutely recommend anyone that’s looking for insurance does shop around to find the best deal,” he said.
Equity analysts following Australia’s major general insurers expect the recent Victorian bushfires, ex‑Tropical Cyclone Koji in Queensland, and a series of storm events across several states to reinforce upward pressure on personal lines premiums. In a note to clients cited by The Australian, Morgan Stanley analyst Richard Wiles said the latest round of extreme weather is likely to weigh on first‑half earnings and “drive elevated pricing for new insurance policies and renewals,” with motor claims costs identified as a key factor. Morgan Stanley’s analysis points to a divergence in personal lines pricing trends. Across the sector, motor premiums are estimated to be about 10% higher over the past 12 months, while home insurance rates have increased by around 3% over the same period after several years of prior adjustments.
For new motor business, the bank highlights IAG and Allianz as among the more active insurers in implementing rate increases, while Suncorp has reduced pricing in some segments. In home and contents, the pattern is reversed: IAG is reported to be easing rate momentum, while Suncorp has applied some of the larger price rises in that class. Looking ahead, Wiles said Suncorp is targeting gross written premium growth of about 4% over the coming year, compared with an expected growth rate of around 7.5% for IAG. He also cited industry feedback that indicates pressure on IAG’s organic customer growth, including reported market share losses for its RACV‑branded portfolio in Victoria. Pengana Capital fund manager Rhett Kessler described IAG as comparatively well positioned to manage catastrophe volatility, referring to its reinsurance structures and risk‑sharing arrangements. By contrast, he said Suncorp’s earnings profile is more volatile. Kessler noted that while customers are experiencing sizeable premium increases, insurers’ underlying cost bases appear to be rising more slowly.
The Victorian fires are adding momentum to discussions about how to balance risk‑based pricing, affordability, and the long‑term viability of regional communities. The ICA is calling for increased investment in mitigation and resilience, including fuel management and forestry practices, as well as other measures aimed at reducing loss severity and frequency, which over time could place less pressure on premiums.
Following the 2019–20 Black Summer bushfires, a Senate committee recommended that the treasurer direct the Australian Competition and Consumer Commission (ACCC) to conduct an inquiry into the supply of insurance in bushfire‑prone regions, examining pricing, availability, [and] profitability in the context of climate risks and potential product or policy innovations. The federal government noted the recommendation in April 2024 but has not yet requested that the ACCC proceed with the inquiry.
Federal Minister for Emergency Management Kristy McBain has acknowledged that insurance costs can be “challenging” and said the government will continue to work with the insurance sector, state and territory governments, industry partners, and communities on long‑term risk‑reduction initiatives. She said the government is collaborating with insurers “to identify mitigation measures that can put downward pressure on insurance premiums in high-risk areas.” For insurers, reinsurers, and intermediaries, the Victorian bushfires and associated catastrophe losses are likely to keep risk‑based pricing, accumulation management, and mitigation incentives at the centre of portfolio and capital decisions, while affordability and access to cover in higher‑hazard regions remain key concerns for regulators and communities.
