Growing protection gap a ‘pressing concern’, notes ICA’s Annual Report

ICA CEO Andrew Hall termed the challenges that the insurance industry faced in 2023 as the “most complex” in a period of over two decades.

Though 2023 can be deemed as a “relatively calm” year when it comes insurance claims relating to natural catastrophes, the Insurance Council of Australia’s Annual Report highlights that a series of cyclones, floods and storms that impacted Australia’s east coast in December last year still ended up costing $1.3bn in insured losses.  

Updated claims data as of March 2024, covering insurance catastrophes and significant event declarations between January to December last year, shows that the average claim amount, at $13,449, was also almost half (a decrease of 48%) of what the average claims were in 2022, with total claims reducing by more than 50%. 

Still, ICA CEO Andrew Hall termed the challenges that the insurance industry faced in 2023 as the “most complex” in a period of over two decades due to a number of factors.  

Hall notes that managing the pressures of premium pricing amidst an ongoing cost-of-living crisis was a big challenge in 2023, highlighting that “all lines of insurance were impacted by rising premiums”, and it was important for the ICA to form robust partnerships with relevant sectors to devise pragmatic solutions. 

The pressures of premium pricing, combined with the cost-of-living crisis also means that Australia’s underinsurance gap—which Swiss Re estimates to be around 35% and increasing—is a “pressing concern” for the insurance industry.  

The announcement of the (currently ongoing) Parliamentary Inquiry into insurers’ responses to the 2022 floods, among other learnings, has reiterated the importance of stabilising premiums.  

Hall noted the industry’s proactiveness in responding to an independent review (separate to the Parliamentary Inquiry) of how insurers responded to the 2022 floods. The review, commissioned by the ICA and undertaken by Deloitte, yielded seven recommendations, prompting changes around how issues of claims handling, communication, and vulnerability identification were approached by the industry.  

Read the full 2023 ICA Annual Report here.