COVID-19 and climate change impact Australia’s P&C insurance industry

news & insights
July 2022

COVID-19 and climate change impact Australia’s P&C insurance industry

The past few years have seen unprecedented industry impacts altering the insurance landscape, and the latest S&P Global Ratings’ (S&P) Insurance Industry and Country Risk Assessment has revealed a number of changes to the Australian property and casualty (P&C) insurance market in particular.

Impacts such as natural disasters, claims inflation, interest rate rises, and investment losses are driving increases in reinsurance and operational costs for insurers. S&P notes that the number of insurers in Australia has reduced by 20% since 2015, to 92 licensed insurers. 

To put some of the recent losses into perspective, the Insurance Council of Australia has reported that the 2022 February/March southeast QLD and northern NSW floods will cost an estimated $4.3 billion, making this event the costliest flood ever recorded in Australia.

The S&P report notes that the ongoing impacts of COVID-19 have seen increased repair costs due to supply chain delays and added costs, while quarantine arrangements and social distancing rules have impacted the labour market, reducing availability. Slowed economic growth and increased inflation are pushing up interest rates, and in addition, real GDP growth in Australia is expected to drop from 4.7% in 2021 to 4.0% in 2022.

Abatement of these upward pressures seems remote as climate change worsens. Deloitte Access Economics has advised that over the 10-year period to 2016, the average cost of natural disasters per year was $18.8 billion. Deloitte forecasts that this figure will double to $39 billion by 2038.


How we can support you

Clients in the current market conditions face significant challenges across all facets, from pricing, deductibles, and capacity, to coverage terms and conditions. Despite the hard market, Allegiant IRS has continued to successfully find cost savings for our clients in insurance program design, placement and management.

Allegiant IRS, and our legal service partner McCullough Robertson, can assist you with a review and assessment of your current insurance policy to ensure you have appropriate cover. We can also guide you through the process of redesign, placement and renewal of insurance cover for your business to ensure optimisation of the market conditions. Given the market dynamics, a tailored program that best fits your current or anticipated risk profile can only be achieved through assessment of your contractual and insurance applications.

We welcome you to speak with one of our trusted advisors about your insurance needs and how we may be able to assist you.



Brad Russell

T +61 7 3233 8786   E

Ian Dobbs
Executive Director

T +61 7 3914 8301   E