Insurers have hit back at allegations of “price gouging” from the Australian Council of Trade Unions, which has criticised the industry’s profits amid rising premiums.  

The union body called out the industry after major insurers IAG, Suncorp and QBE posted notable profits for last financial year. It says customers have seen premiums increase nearly 36% in the past three years. 

“In March 2021, insurance contributed about 3.1% of the total annual growth in the consumer price index. Now, because of these rapid price rises, insurance contributes 5.7% to the CPI, as shown in the June-quarter 2024 results,” ACTU assistant secretary Joseph Mitchell said.  

“The insurance companies are crying poor and blaming cost increases, but they have increased premiums well above costs to post record profits, using the same price gouging formula as other major businesses coming out of the pandemic.”

A senior industry source told insuranceNEWS.com.au the accusations of price gouging are inaccurate, saying rising premiums reflect increased costs for building materials, new and used vehicles, vehicle parts, and building and vehicle repairs.

“While price changes for insurance, like anything else, [are] a component of the consumer price index, increases in insurance premiums are a reflection of higher claims costs, not an underlying cause of the inflationary environment,” the source said.

“Insurer profits in recent years were heavily impacted by large national catastrophes such as the 2020 Black Summer bushfires, 2022 floods and 2023 Christmas storms.

“Insurers have made significant losses on home insurance in recent years. Large ... percentage increases in insurer profits simply indicate they are returning to longer-term, sustainable levels.”

The Insurance Council of Australia says rising premiums have been shown to be a response to the “escalating cost of extreme weather, inflation and the growing value of our assets”. 

“New data released by the Insurance Council of Australia this week shows that the impact of extreme weather on the Australian economy has more than tripled over the past three decades,” a council spokesperson told insuranceNEWS.com.au. “It also showed that while premium collected since 2012 has increased significantly, insurer profit has remained flat over this period.”