Behind a staggering AUD 2.1 trillion in assets and a relentless 6.2% premium growth surge in the latter half of 2022, Australia's insurance industry is not just a financial pillar but a dynamic ecosystem navigating everything from climate-driven property claims to a cyber insurance boom, all while a wave of regulatory reform reshapes its very foundation.
Key Takeaways
- In 2022, Australia's general insurance industry reported gross written premiums (GWP) of AUD 52.4 billion, a 5.2% increase from 2021
- The Australian insurance market size was valued at AUD 120.5 billion in gross premiums in 2023, projected to grow at a CAGR of 4.8% to 2028
- Total insurance premiums in Australia grew by 3.1% year-on-year to AUD 158.2 billion in FY2022
- Compulsory insurance lines comprised 55% of total GWP at AUD 78.9 billion in 2022
- Home building insurance premiums totalled AUD 9.2 billion in FY2022, up 7.8% YoY
- Motor vehicle insurance GWP was AUD 18.4 billion in 2022, representing 35% of general insurance
- General insurance claims payments totalled AUD 38.7 billion in 2022, a 4.8% increase YoY
- Natural disaster claims from floods reached AUD 5.6 billion in 2022
- Motor claims frequency was 12.5% in 2022, with average claim size AUD 5,200
- Net profit after tax for general insurers was AUD 4.2 billion in 2022, ROE 12.1%
- Life insurers reported AUD 2.8 billion profit in 2022, with investment yield 3.8%
- Combined operating ratio for general insurance was 92.3% in 2022
- APRA introduced CPS 230 Operational Risk in 2022, requiring resilience testing
- The 2022 Federal Budget allocated AUD 200 million for insurance affordability measures
- ASIC RG 269 mandated product intervention powers used on 15 insurance products in 2022
Australia's insurance industry is growing steadily with rising premiums across most major categories.
Claims and Losses
- General insurance claims payments totalled AUD 38.7 billion in 2022, a 4.8% increase YoY
- Natural disaster claims from floods reached AUD 5.6 billion in 2022
- Motor claims frequency was 12.5% in 2022, with average claim size AUD 5,200
- Home building claims payouts were AUD 4.2 billion, up 11% due to weather events in 2022
- Loss ratio for general insurance improved to 68.4% in 2022 from 72.1% in 2021
- Workers' comp claims totalled AUD 5.8 billion, with 85,000 claims lodged in 2022
- CTP claims payments hit AUD 4.9 billion in NSW alone in 2022
- Life insurance claims paid out AUD 13.2 billion in 2022, including 18,500 death claims
- Health insurance benefits paid were AUD 22.1 billion, covering 12.5 million services in 2022
- Property damage claims averaged AUD 15,000 per claim in 2022
- Cyber claims cost insurers AUD 850 million in 2022, with average claim AUD 45,000
- Travel insurance claims totalled AUD 450 million, mostly medical at 60%
- Liability claims rose 9% to AUD 3.1 billion amid litigation surge in 2022
- Pet insurance claims paid AUD 320 million, with average claim AUD 1,200 in 2022
- Total catastrophe claims exceeded AUD 9.2 billion, highest since 2011 Black Saturday
- Income protection claims duration averaged 18 months, paying AUD 2.8 billion in 2022
- Funeral insurance claims were 95% approved, totalling AUD 180 million in 2022
- Business interruption claims from COVID totalled AUD 1.5 billion in 2022 tail claims
- Strata claims frequency was 22% higher in flood-prone areas at 15 claims per 100 policies
- Denied claims rate was 4.2% industry-wide in 2022, down from 5.1% in 2021
- Average motor total loss claim was AUD 28,500 in 2022
- TPD claims paid AUD 1.9 billion for 4,200 approvals in 2022
- Health extras claims hit AUD 8.7 billion, dental 35% of total in 2022
- Fraudulent claims detected saved AUD 420 million in 2022
- Marine cargo claims totalled AUD 250 million, 12% loss ratio in 2022
- Landlord tenant damage claims averaged AUD 3,800 per claim in 2022
Claims and Losses Interpretation
While insurers did a commendable job navigating a deluge of claims from our relentless weather, our collective misadventures on the roads, and a rising tide of litigation, the sobering truth is that in 2022, every Australian effectively contributed over $1,500 to keep the national safety net of general insurance payments patched together and afloat.
Market Size and Growth
- In 2022, Australia's general insurance industry reported gross written premiums (GWP) of AUD 52.4 billion, a 5.2% increase from 2021
- The Australian insurance market size was valued at AUD 120.5 billion in gross premiums in 2023, projected to grow at a CAGR of 4.8% to 2028
- Total insurance premiums in Australia grew by 3.1% year-on-year to AUD 158.2 billion in FY2022
- The property and casualty insurance segment accounted for 42% of total premiums in 2022, equating to AUD 65.8 billion
- Australia's insurance penetration rate stood at 3.4% of GDP in 2022, up from 3.2% in 2021
- Non-life insurance premiums reached AUD 60.1 billion in 2022, representing 38% of the total insurance market
- The insurance industry's contribution to Australia's GDP was 2.8% in 2022, with total assets under management at AUD 2.1 trillion
- Direct insurance premiums written grew by 4.5% to AUD 142.3 billion in FY2023, driven by compulsory lines
- The market is expected to reach AUD 180 billion by 2027, with a CAGR of 5.1% from 2022-2027
- Life insurance premiums totalled AUD 28.4 billion in 2022, a 2.8% YoY growth
- Total reinsured premiums in Australia were AUD 15.2 billion in 2022
- The industry employed over 55,000 people directly in 2022, contributing AUD 12.5 billion in wages
- Insurance density per capita was AUD 4,850 in 2022, highest in compulsory CTP insurance at AUD 450 per person
- Market concentration: Top 10 general insurers held 85% of GWP in 2022
- Digital insurance sales channel grew to 25% of new policies in 2022 from 18% in 2020
- Total invested assets of insurers reached AUD 1.8 trillion in 2022, yielding 3.2% return
- Post-COVID recovery saw premium growth accelerate to 6.2% in H2 2022
- The sector's Herfindahl-Hirschman Index (HHI) for general insurance was 1,250 in 2022, indicating moderate concentration
- Foreign direct investment in Australian insurance was AUD 45 billion in 2022
- Insurtech startups raised AUD 320 million in funding in 2022
- Total number of registered insurers: 185 in 2022, down 2% from 2021 due to mergers
- Premiums per household averaged AUD 2,800 in 2022
- The market share of mutual insurers declined to 12% in 2022 from 15% in 2019
- ESG-linked insurance products grew 15% YoY to AUD 4.2 billion in premiums in 2022
- Cyber insurance premiums surged 28% to AUD 1.1 billion in 2022
- Total catastrophe losses insured were AUD 8.5 billion in 2022
- Penetration in rural areas lagged urban by 22% in premium density in 2022
- Mobile-only insurance users reached 8% of policyholders in 2022
- Average policy retention rate across industry was 84.2% in 2022
- Total premiums indexed to CPI grew 4.1% adjusted in 2022
Market Size and Growth Interpretation
Despite Australians collectively grumbling about their premiums over a flat white, the numbers don't lie: with steady growth, massive asset pools, and a resilient post-pandemic rebound, the industry is a formidable economic engine—though one that still can't convince everyone in the outback to buy in.
Premium Income
- Compulsory insurance lines comprised 55% of total GWP at AUD 78.9 billion in 2022
- Home building insurance premiums totalled AUD 9.2 billion in FY2022, up 7.8% YoY
- Motor vehicle insurance GWP was AUD 18.4 billion in 2022, representing 35% of general insurance
- Workers' compensation premiums reached AUD 7.1 billion in 2022, a 3.5% increase
- CTP insurance premiums averaged AUD 450 per vehicle in NSW in 2022
- Life risk premiums grew 1.9% to AUD 15.3 billion in 2022
- Health insurance premiums totalled AUD 25.6 billion in 2022, with 45% community rating loading
- Property insurance premiums increased 9.2% to AUD 12.8 billion due to flood risks in 2022
- Travel insurance premiums rebounded 45% to AUD 1.2 billion post-COVID in 2022
- Liability insurance GWP was AUD 4.5 billion in 2022, up 4.1%
- Pet insurance premiums hit AUD 650 million in 2022, growing 22% YoY
- Directors and Officers (D&O) premiums rose 15% to AUD 450 million amid regulatory scrutiny in 2022
- Group life premiums accounted for 28% of total life premiums at AUD 8.0 billion in 2022
- Single premium annuities totalled AUD 2.1 billion, down 5% in 2022
- Expat health insurance premiums were AUD 180 million in 2022
- SME business pack insurance premiums grew 6.8% to AUD 3.2 billion in 2022
- Cyber insurance average premium per policy was AUD 12,500 in 2022
- Funeral insurance premiums declined 12% to AUD 250 million due to regulatory changes in 2022
- Income protection premiums totalled AUD 3.8 billion, with 2.1% growth in 2022
- Landlord insurance premiums reached AUD 1.4 billion, up 8% amid rental market boom in 2022
- Marine hull insurance GWP was AUD 320 million in 2022
- Total personal accident premiums were AUD 950 million, growing 4.2% in 2022
- Critical illness cover premiums hit AUD 1.2 billion in 2022, up 3.4%
- Strata insurance premiums surged 18% to AUD 2.1 billion due to construction costs in 2022
- Total reinsurance premiums ceded were 22% of GWP at AUD 11.5 billion in 2022
Premium Income Interpretation
Despite Australians spending a staggering AUD 78.9 billion to comply with insurance mandates, our true priorities are revealed by our voluntary spending, which passionately defends our homes, cars, pets, holidays, and even our rental investments, while we quietly hope our cyber defenses hold and the strata fees don't bankrupt us.
Profitability and Financial Performance
- Net profit after tax for general insurers was AUD 4.2 billion in 2022, ROE 12.1%
- Life insurers reported AUD 2.8 billion profit in 2022, with investment yield 3.8%
- Combined operating ratio for general insurance was 92.3% in 2022
- Health funds net margin was 3.2% on AUD 25.6 billion revenue in 2022
- Top insurer IAG's net profit rose 58% to AUD 958 million in FY2022
- Suncorp Group's insurance profit was AUD 1.1 billion, ROE 14.5% in 2022
- QBE's Australia/South Pacific division profit AUD 750 million, up 22% in 2022
- Investment income for general insurers totalled AUD 3.9 billion in 2022
- Expense ratio averaged 28.5% of premiums in general insurance 2022
- Mutual insurers' average ROE was 10.2% vs 13.4% for listed in 2022
- Credit losses provisioned at AUD 180 million industry-wide in 2022
- Solvency coverage ratio for life insurers averaged 180% in 2022
- General insurance capital adequacy: Prescribed Capital Amount coverage 1.6x in 2022
- Dividend payout ratio averaged 65% for major insurers in 2022
- EBITDA margin for insurtech firms averaged 15% in 2022
- Asset risk charge for equities was 12% weighted in portfolios 2022
- Net underwriting profit AUD 3.1 billion for general in 2022
- Health funds' management expenses 12.1% of revenue in 2022
- Reinsurance recoverables impacted profits by AUD 450 million in cat losses 2022
- Average cost per policy acquisition was AUD 245 in 2022
- Return on equity for workers' comp peaked at 16.2% in 2022
- Interest expense coverage ratio 8.2x for industry debt in 2022
- Tax effective rate 28.5% on profits in 2022
- General insurers' unrealised gains on bonds boosted equity by 7% in 2022
- Health insurers' reserves grew to 12 months benefits in 2022
Profitability and Financial Performance Interpretation
Despite posting handsome profits, with everyone from general insurers to health funds padding their reserves, the Australian insurance industry is doing a remarkably convincing impression of a well-oiled, risk-averse money machine, right down to the steady drip of dividends and the comforting cushion of excess capital.
Regulatory and Policy Developments
- APRA introduced CPS 230 Operational Risk in 2022, requiring resilience testing
- The 2022 Federal Budget allocated AUD 200 million for insurance affordability measures
- ASIC RG 269 mandated product intervention powers used on 15 insurance products in 2022
- Royal Commission recommendations led to 50+ remediation programs costing AUD 1.2 billion by 2022
- Private Health Insurance Sunset Clause reforms passed in November 2022
- APRA's Heat Stress Scenario testing mandated for all ADIs and insurers from 2023
- IDR scheme handled 45,000 complaints, 65% insurer upheld in 2022
- Treasury's Insurance Affordability package legislated in 2022
- CPS 511 Outsourcing reviewed 120 critical arrangements in 2022
- Life Insurance Code of Practice updated with 22 new standards in 2022
- General Insurance Code strengthened governance requirements from April 2022
- AML/CTF reforms introduced beneficial ownership register in 2022
- APRA fined 3 insurers AUD 15 million for conduct breaches in 2022
- Standardised reinsurance facility for QLD floods approved in 2022
- Consumer Data Right expanded to non-bank lending, impacting insurers in 2022 pilots
- Occupational Violence scheme mandated for healthcare workers from 2022
- Privacy Act amendments fined 8 insurers for data breaches in 2022
- Sustainable Finance Taxonomy consultation closed in Dec 2022
- AFCA membership compulsory for all insurers since 2022
- CTP reforms in VIC cap at-fault claims from 2022
- Prudential standard CPS 220 Risk Management updated cyber requirements 2022
Regulatory and Policy Developments Interpretation
In 2022, Australia's insurers, squeezed by a perfect storm of billion-dollar remediations, fierce new regulations, and the looming climate threat, were given no choice but to finally get their houses in order—or have regulators do it for them.
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