Insurance premiums and affordability – how can we curb the cycle of loss and costs?

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The emergence of environmental issues such as global warming and climate change have triggered a dramatic global shift, including in Australia, where natural disaster losses continue to accumulate. Given the copious losses, reinsurance companies are increasingly under pressure as they...

Siew Wei Chai – ANZIIF (Snr Assoc) CIP

11 May 2026

5 mins read

Insurance premiums and affordability – how can we curb the cycle of loss and costs?

The emergence of environmental issues such as global warming and climate change have triggered a dramatic global shift, including in Australia, where natural disaster losses continue to accumulate.

Given the copious losses, reinsurance companies are increasingly under pressure as they underwrite the riskiest portion of insurers’ portfolios.

As a result, the need to recapitalise may lead to a continuation of the current hard market as both reinsurance and insurance companies transfer their costs to their customers and in turn, premium prices continue to increase.

This concern was raised in a 2022 study published by Fitch, Commercial Insurance: Past the Market Peak. It stated that commercial insurance premiums have increased consecutively for seventeen quarters, citing high claims volumes, substantial underwriting losses and the COVID-19 pandemic.

Now well into the second quarter of 2023, we can observe the predicted cycle in the market, with several media sources (including Insurance News.com, The West Australian and the Sydney Morning Herald), pointing to IAG’s decision to increase premiums, citing a “massive influx of disaster payout claims, inflationary pressures and rising reinsurance costs”.