Australia’s general insurance industry will reach gross written premium (GWP) of $98 billion in 2025, from $76.3 billion last year, supported by gradual economic recovery and growing demand for insurance against natural disasters, GlobalData predicts.

GWP is forecast to grow at a compound annual rate of 5% each year to 2025 as the economy rebounds and demand for insurance against natural disasters grows.

Analyst Deblina Mitra says effective management of the coronavirus outbreak, fiscal support and speedy adoption of innovative business models helped improve the Australian economy, with most businesses reopening in September last year.

“The reopening of several economic sectors will aid demand for general insurance in 2021,” Ms Mitra says. “Cyber-security, mental health well-being and domestic travel are expected to be key focus areas for insurers over the next five years.”

Net earned premiums across the industry grew 6.1% in the September quarter, after a decline of 4.8% in the previous quarter, bolstered by improvements in both investment income and underwriting results.

Motor insurance, the largest general insurance line with 24% share of direct written premium (DWP), reported lower growth of 2.9% last year due to tighter lending conditions, which are expected to continue this year.

Motor insurers are launching innovative products to drive sales, including pay-as-you-go and short-term car insurance where premiums are charged based on distances recorded via telematics devices.

Property insurance, the second largest insurance line with 21% share of the DWP, was marked by heavy natural catastrophe losses last year, including the costly “Halloween” hailstorm in Queensland on October 31.

Catastrophe-linked insurance lines have experienced double-digit increments in prices since late 2017 which GlobalData expects to continue this year. High losses from wildfires and other catastrophic events have persistently pushed these premium prices higher during the last five years.