The cost of home insurance in Australia has risen by 92% over the past decade—far outpacing wage growth—and the Australian Prudential Regulation Authority (APRA) says the pressure on insurers to keep coverage affordable is only going to intensify.
Speaking at the Future of Insurance 2025 conference, APRA executive director for general insurance and banking Jane Magill warned that rising premiums, growing catastrophe losses, and service provider risks are converging to test the industry’s resilience.
“Insurance coverage that is too expensive to acquire or not offered at all is a poor outcome for consumers, insurers and the government alike,” Magill said, pointing to the recent 16% year-on-year increase in home insurance premiums as a sign of growing affordability challenges.
Magill’s speech followed the recent impact of Tropical Cyclone Alfred, which has already led to more than 75,000 insurance claims. She acknowledged early efforts by insurers to assist affected customers but stressed that frequent, high-cost weather events are now part of the landscape.
“We are now living in a world where high-cost, billion-dollar insurance events should be expected almost yearly,” she said, citing a Deloitte report.
To address these growing risks, APRA is rolling out two major reforms: the Financial Accountability Regime (FAR) this month and the CPS 230 Prudential Standard on Operational Risk Management in July. Both are intended to reinforce governance and ensure insurers can continue operations—including claims processing—during major disruptions.
“You can delegate the task, but you cannot delegate your responsibility,” Magill said, referencing insurers’ increasing use of third-party providers. CPS 230 requires insurers to manage operational risks, maintain business continuity plans, and strengthen oversight of external service arrangements.
In addition to operational reforms, Magill said insurers must also focus on rebuilding trust with consumers through greater transparency: “APRA believes the industry could better explain how policies are priced and what risks are covered.” Without this clarity, she said “the wrong assumptions can arise.”
