Premium affordability and insurability are emerging as primary concerns for Australian insurers in 2026 as rising claims costs, climate-related losses, and technology-enabled fraud influence pricing, underwriting, and capital allocation, according to Gallagher Bassett’s 2026 global claims study.
Gallagher Bassett has released The Carrier Perspective: 2026 Claims Insights, the fourth edition of its annual white paper, based on survey responses from 250 insurance leaders and decision makers across Australia, North America, and the UK. Respondents include C-suite executives, vice presidents, senior directors, and business unit leaders from traditional carriers, managing general agents (MGAs), and underwriting agencies. Pete Diskin (pictured), Gallagher Bassett’s chief client officer, said the findings point to a continuation of existing pressures alongside newer concerns. “Some business risks highlighted in the 2025 report persist, while newly identified challenges have quickly grown into key strategic concerns in the past year,” Diskin said.
For Australian respondents, premium affordability and insurability rank as the leading business challenge. Twenty-two percent of local participants identified it as their top issue, reflecting the combined impact of claims inflation, macroeconomic conditions, regulatory and compliance costs, and catastrophe exposures on capacity and pricing. Gallagher Bassett’s analysis indicates that affordability pressures are most evident in general liability, property, and auto liability. More than a third of Australian insurers point to general liability as the line where they have seen the largest change in claims frequency and severity, with property and auto also reporting notable shifts. Climate-related events, inflation in materials and labour, and more complex liability claims are influencing rate adequacy and coverage availability for certain industries and risk profiles.
Across the market, 70% of Australian insurers reported both higher costs per claim and an increase in claim frequency over the past year, and 50% said they plan to raise premiums. “Insurers also say they are enhancing risk assessments and implementing changes to coverage limits and terms. Sustaining growth under these conditions requires that insurers implement proactive cost management strategies. How they approach pricing, claims forecasting, and triage will determine profitability,” Diskin said.
Data and cybersecurity have moved into second place among Australian business challenges, cited among the top three issues by more than half of local respondents and ranked number two overall at 20%. The report notes that most insurers have adopted data encryption and regular data audits, in line with regulatory expectations and increasing exposure to cyber incidents in both internal operations and client portfolios. Technology is also changing how fraud risk is emerging and managed. Nearly three-quarters of Australian insurers surveyed have implemented generative AI tools for fraud detection. Seventy-two percent report an increase in fraudulent or suspicious claims involving AI-generated documents, which has led insurers to strengthen fraud controls and verification processes around documentation and identity.
According to the report, 62% of Australian respondents see technology-related fraud and AI manipulation as important contributors to rising claim-related costs. Insurers are using AI-driven predictive analytics, rules-based engines, and digital monitoring tools to flag suspicious activity earlier in the claims lifecycle, while maintaining manual reviews for complex or sensitive cases. More broadly, 40% of Australian and 46% of global respondents list the need to adapt to rapid technological change among their top three challenges. The study indicates that governance over data usage, algorithmic decision-making, and model risk is becoming a defined component of enterprise risk frameworks.
Talent attraction and retention are identified as the third-largest challenge for Australian insurers, with 16% of respondents naming it as their top concern. Workforce issues have moved up the priority list locally, rising from seventh place in 2025 to third in the latest survey. Three in four Australian insurers report greater difficulty in recruiting suitably skilled staff, with the greatest shortages in claims management, loss adjusting, and specialised case management roles. Labour constraints and skills gaps are viewed as direct drivers of higher claims handling costs and slower throughput, with four in five respondents citing at least a moderate impact on claims management efficiency.
The report notes that insurers are reviewing remuneration structures, increasing investment in training and development, and using more flexible work models to support retention and maintain service levels. Diskin said this pattern is not limited to Australia. “Workforce and cyber challenges are being experienced across all surveyed regions. What our research tells us broadly is that our industry is learning to navigate a complex market. Insurers need to manage a mix of interrelated regulatory, technological, economic, and people challenges,” Diskin said.
Medical inflation is highlighted as a key driver of claim-related costs in the Australian market. Insurers report that higher healthcare expenses are influencing pricing models and risk assessment, particularly in general liability and auto liability. In these lines, a significant share of respondents identify medical costs as a major factor in claims severity, reflecting trends in hospital charges, rehabilitation expenses, and treatment duration.
Workers’ compensation illustrates how these dynamics are playing out. While some portfolios have recorded reduced claim frequency, average claim costs continue to rise, associated with more complex injuries, workforce demographics, and longer recovery periods. The report notes that insurers are prioritising early intervention, return-to-work programs, and targeted provider negotiations in an effort to manage medical and wage-related costs. Overall, 74% of Australian participants said claims have become more complex over the past 12 months. Seventy percent observed higher costs per claim together with increases in frequency. More than four in five indicated that claims are not being finalised as quickly as in the previous year, and where matters are resolved, settlements are often at higher values.
Australian insurers are responding to these pressures through changes to pricing, underwriting, and operations. Sixty per cent (60%) of respondents identify adjustments to pricing models as their main response to social inflation, a higher proportion than in 2025. Fifty-eight percent report enhancing risk assessment, and around half say they are tightening coverage limits and terms or increasing premium rates. Fraud detection technology and AI-based predictive analytics are among the most commonly used tools for managing medical and other claims costs, each cited by about 72% of Australian and global respondents. These tools are being used to prioritise files, anticipate claim development, and support data-driven reserving and underwriting decisions.
In parallel, insurers are refining triage processes, focusing more closely on recovery and subrogation opportunities, and reassessing reinsurance structures in light of catastrophe events and capital costs. The report suggests that claim-related cost escalation in Australia is being treated less as a short-term cycle and more as an ongoing feature shaped by social inflation, climate events, medical trends, regulatory developments, and technology. The Carrier Perspective: 2026 Claims Insights concludes that pricing discipline, technology-enabled operations, talent development, and risk governance are central themes in how carriers are responding to premium affordability and insurability concerns, while seeking to maintain capacity and meet stakeholder expectations in a more complex market environment.
