Australia’s property insurance market is expected to continue expanding over the rest of the decade, with premium volumes forecast to rise as natural peril exposure, claims inflation, and policy responses shape the sector’s development.
GlobalData estimates that Australia’s property insurance market will grow at a compound annual growth rate of 7.5% between 2026 and 2030, with direct written premiums forecast to rise from $27.4 billion (US$18 billion) in 2026 to $36.6 billion (US$23.7 billion) by 2030. The firm links the outlook to structural climate risk, ongoing claims inflation, and continued demand for catastrophe cover. According to GlobalData’s Global Insurance Database, the market grew 5.8% in 2025, driven by higher premium rates and elevated natural hazard exposure. Annual growth is projected to edge up to 5.9% in 2026 as pricing conditions ease from an extended hard market, with risk trends, government relief measures, and operational changes shaping portfolio strategies.
Katam Prasanth, senior insurance analyst at GlobalData, commented: “Australia’s property insurance sector is shifting from a period of sharp premium increases to more stable conditions, while the main pressures remain. Exposure to natural hazards and higher claims costs continue to influence pricing. Initiatives such as the cyclone reinsurance pool, stronger governance and transparency, and faster adoption of digital tools in underwriting and claims are expected to strengthen resilience through 2030.” Australia remains exposed on a per-capita basis to floods, cyclones, and severe convective storms, which continue to generate insured losses and frequent claims in short-tail classes.
Industry data suggests some easing in total catastrophe losses, but smaller shifts in claim numbers. The Insurance Council of Australia (ICA) has reported that insured catastrophe losses declined 25% from $2.61 billion (US$1.8 billion) in FY 2023-24 to $1.97 billion (US$1.4 billion) in FY 2024-25, while claim volumes fell by 7%. Rising rebuild and repair costs continue to push severities higher, influencing premium requirements and underwriting settings. “Reflecting these dynamics, the premiums are estimated to moderate in 2026 as pricing conditions gradually ease from an exceptionally hard cycle,” Prasanth said.
Regulatory and policy intervention is starting to affect pricing and coverage in the most exposed regions. The Australian Reinsurance Pool Corporation (ARPC) reports that the government-backed cyclone reinsurance pool has produced average premium reductions of up to 39% for households and 31% for small and medium-sized enterprises in the highest-risk zones, along with higher quote success rates. The pool is intended to help insurers maintain capacity while supporting coverage levels in cyclone-prone communities. “Improved hazard defences and mitigation incentives can reduce severity over time and support more sustainable insurance availability, even as climate-driven weather volatility remains a structural feature of the risk landscape,” Prasanth said. The federal government has also committed $9 billion (US$6.3 billion) in climate adaptation funding through 2030, targeting flood, bushfire, and cyclone mitigation projects. Over time, these investments may affect risk selection, pricing, and capital allocation across property portfolios.
Home insurance pricing indicators show ongoing affordability strain for many households. Finity reports that average home insurance premiums rose 51% nationwide over the five years to October 2025, increasing from $1,940 in 2020 to $2,938. The firm links the rise to catastrophe losses, construction cost inflation, and changes in insurers’ risk appetites, including more granular pricing by location and peril. Finity’s capital city breakdown highlights wide geographic differences. As of October 2025, Darwin recorded the highest average home premium at $4,015, followed by Sydney at $3,964 and Brisbane at $3,872. Canberra, Melbourne, Hobart, Perth, and Adelaide ranged from approximately $2,042 to $2,622.
Premiums are even more concentrated in specific hazard‑exposed areas. Average annual premiums in Brisbane’s west are about $8,396, compared with $5,410 in Darwin City and $5,350 across Sydney’s outer west and Blue Mountains. These differentials reflect exposure to flood, bushfire, and severe storms, as well as local claims experience and reinsurance costs. Survey work indicates that price movements are feeding into consumer concerns and coverage decisions. A YouGov poll commissioned by the Climate Council in January 2026 found that 54% of insured respondents were concerned that bushfires, floods, and severe storms could make home insurance unaffordable or unavailable in their area. Nearly half (46%) said their premiums had already increased because of extreme weather, while 22% indicated they may consider going without insurance if prices continue to rise.
Multiple data sources and industry commentary point to a widening protection gap as premiums increase and rebuilding costs adjust. Underinsurance is generally described as a situation where the sum insured is not sufficient to fully rebuild a dwelling or replace contents on a like‑for‑like basis after a major loss. The ICA has said that this situation makes it difficult “for those Australians who are under-insured to resume their standard of living – whether it’s rebuilding their home or replacing belongings to the same standard – if their property is badly damaged or destroyed.”
Quantity surveyor firm MCG estimates that a significant share of Australia’s 11.4 million residential dwellings may now be underinsured after several years of construction cost inflation. Director and property insurance specialist Marty Sadlier said many policyholders may be relying on outdated rebuild estimates. “Many homeowners simply don’t know what it would actually cost to rebuild their property today. Demolition, compliance with new building codes, professional fees – all of that adds up. Without a proper replacement cost assessment, people are effectively guessing, and guessing is risky when your home is your biggest asset,” Sadlier told 7NEWS.com.au.
Research by the Australia Institute in 2025 suggested that about 1.4 million homes were either uninsured or under-insured, highlighting exposure among owner-occupiers. Senior economist Matt Grudnoff said: “Australian families are facing an almost impossible choice when it comes to home and contents insurance. They either find the money to pay ridiculous premiums or risk losing everything they own.” A Nine.com.au poll in late 2025 found that around three-quarters of respondents expected premiums to rise further in 2026, with more than half reporting they had already experienced an increase in the previous year. Some respondents said they had cancelled cover due to affordability pressures, including one who said: “I can’t afford insurance and food.” Another commented: “I have never made a claim in 65 years, and my premium just keeps going up. I’m about to cancel all insurance and take a risk.”
Insurers are expanding the use of automation and artificial intelligence in claims and underwriting to manage surge events, shorten processing times, and reduce loss‑adjustment expenses. AI‑based fraud detection tools and data-sharing initiatives are also being used to address organised fraud and limit claims leakage. According to GlobalData, these operational changes, together with public adaptation spending and mechanisms such as the cyclone reinsurance pool, are likely to influence how growth, affordability and insurability develop toward 2030.
Prasanth said: “Australia’s property insurance market is expected to keep growing through 2030 as natural hazard exposure and rising claims costs continue to drive premiums, even as pricing stabilises. While catastrophe losses have eased, claims frequency and rebuild-cost inflation remain elevated, sustaining underwriting pressure. Government measures and adaptation spending should improve affordability and insurability in high-risk areas, while AI and digitalisation enhance efficiency and resilience.” A key task for the industry will be to align premium growth and capital deployment with mitigation initiatives, product features, and customer engagement that limit further expansion of the residential protection gap.
