Reinsurance Costs & impact to Consumers 2023 - 2024

Reinsurance Costs & impact to Consumers 2023 - 2024

Reinsurance is insurance for insurance companies. Just like any business, insurers buy insurance for large catastrophes to ensure they have enough money available to pay claims. 

The main reinsurance renewal dates are 1 January and 30 June. This is when insurers must look at whether they also need to change their customers' policy cover or prices charged to customers. 

Reinsurance can be purchased for all types of cover, including aviation, crop, property risks and catastrophes. 

Just like a business insuring a motor vehicle, an excess is payable in the event of a claim. However, insurers can pay up to $350 Million excess towards any one event, such as a bushfire or hailstorm. Of the $6 Billion in claims following the March 2022 Eastern Australian storms and floods, reinsurers reimbursed insurers $2 Billion - $3 Billion of the $6 Billion total value of these claims. 

Projections for Reinsurance 2023/ 2024

Reinsurers are in business to make a profit, like any other business. Due to the increasing number of natural catastrophises around the world, reinsurers are charging higher premiums to insurers and negotiating increases in excesses. This change is a permanent structural change. 

The insurance industry expects similar premium and excess increases in 2024.

Society and insurance

Insurance is essential to everyone: businesses, consumers, and governments. However, due to the increasing number and cost of catastrophises, some areas and types of risk are fast becoming uninsurable. They will need to be managed by the government and society through mitigation, prevention, and climate change adaptation, with insurance as a response to manage volatility.

Impact on Insurance Consumers

As insurers pay higher premiums and excesses, these costs will increase the pressure on insurers to increase their premiums to customers. Insurers are also earning higher investment income. However, this is partly offset by continuing high inflation, resulting in increased labour and parts costs for claim repairs.

It is possible that more insurers will decide not to offer insurance cover for certain areas due to the catastrophe risks of storms, floods, or bushfires. 

General Advice Warning

This communication including any weblinks or attachments is for information purposes only. It is not a recommendation or opinion, your personal or individual objectives, financial situation or needs have not been taken into account.This communication is not intended to be a constitute personal advice. We strongly recommend that you consider the suitability of this information, in respect of your own personal objectives, financial situation and needs before acting on it.This document is also not a Product Disclosure Statement (PDS) or a policy wording, nor is it a summary of a particular products features or terms of any insurance product. If you are interested in discussing this information or acquiring an insurance product, you should contact your insurance adviser to obtain and carefully consider any relevant PDS or policy wording before deciding whether to purchase any insurance product.

Business Interruption Insurance

Business Interruption Insurance

From your family and employees to customers and suppliers, there are a lot of people who depend on your business opening its doors each day.

SME Business Insurance

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

Find your local Insurance Adviser

Talk to your local Adviser to get advice about your insurance needs and to get a quote