Australian General Insurers Report Record 19% Return on Equity in FY25

The latest Optima Report from actuarial consultancy Finity highlights that the sector's ROE has risen by six percentage points compared to the previous year. This improvement underscores the industry's resilience and adaptability in navigating the evolving economic landscape.

Key factors contributing to this outstanding performance include:

• Benign Weather Conditions: The absence of major natural disasters during the period reduced claims, positively impacting profitability.
• Strong Investment Gains: Strategic investment decisions yielded substantial returns, bolstering the financial standing of insurers.
• Premium Increases: Adjustments in premium pricing have effectively offset rising operational costs and claims expenses.

Despite these positive outcomes, the industry faces ongoing challenges. Claims and related expenses totaled $13.9 billion, while the net insurance service result increased to $2.67 billion. The sector's total assets reached $140.9 billion, with net assets of $41.2 billion and a return on net assets of 5.8%.

Intermediaries continue to play a vital role in the distribution of insurance products. Total premiums invoiced through intermediaries amounted to $21.5 billion for the six months ending June 2025. Of this, $17.6 billion was placed with APRA-authorised general insurers, $2.6 billion with Lloyd’s underwriters, and $1.3 billion with unauthorised foreign insurers (UFIs). The number of intermediaries in the market increased to 1,740, up from 1,717 at the end of 2024, indicating a steady growth in intermediary participation.

Looking ahead, the industry must remain vigilant to macroeconomic and risk trends that could influence future performance. These include a tight labour market with wage growth outpacing productivity, which may complicate efforts to manage inflation. Additionally, the increasing frequency and severity of climate-related events pose potential risks that could impact the sector's profitability.

For tradespeople and small business owners, these developments underscore the importance of staying informed about industry trends and ensuring that their insurance coverage remains adequate and up-to-date. Engaging with knowledgeable intermediaries can provide valuable insights and assistance in navigating the complexities of the insurance market.