Premium rate increases and a recovery in investment returns lifted the industry to a net profit after-tax of $3.6 billion. The earnings are markedly better than the average level of $500 million reported annually between financial years 2019/20 and 2021/22, Finity’s Optima report says.

In this financial year to June 30 2024 the industry is expected to make a net profit of about $4.1 billion. Premium rates are still expected to increase as cost pressures persist. Gross earned premium (GEP) is forecast to grow 10.7%, after rising 12.5% to $56 billion.

Following is Optima’s analysis of the key personal and commercial lines:


The tough operating environment continued as anticipated into FY23. Inflation for householders continued to run above 10% overall, with building material costs continuing to increase strongly, alongside rising labour cost pressures.

Householders continues to face a challenging future but some inroads have been made off the back of recent strong premium rate increases, along with expense ratio improvements.

Finity expects further improvement in FY24. However profitability will still fall short of target return on equity levels. GEP is forecast to rise 14.2% to $12.6 billion.

Private motor

Profitability declined further in FY23 off the back of increases in both claims frequency and severity. The line recorded its worst combined operating ratio since FY17.

Strong premium growth is expected in FY24 with further rate increases likely in response to ongoing (albeit now easing) inflationary pressures. GEP should grow to $12.8 billion, up 11.9% from the prior year.


FY23 was the first full year free from travel restrictions post-covid. Travel volumes in recent months are nearly the same as the equivalent period before the pandemic. Against a backdrop of economic pressures, this normalisation has been a welcome sight for travel insurers.

The favourable conditions are expected to continue in the coming year. Gross written premium (GWP) in FY23 reached a record $1.5 billion and is forecast to top $2 billion this financial year.

Compulsory third party (CTP)

In FY23 the total GWP pool grew by a little over 4.5% to $3.5 billion, due to a strong rebound in new vehicle sales and increases in premium rates in Queensland and South Australia.

Finity continues to observe pressure on average claim sizes due to increasing psychological claims experience across most jurisdictions.

Fire and Industrial Special Risk (ISR)

APRA data includes commercial property for corporate and SME markets on a combined basis only.

The total GWP pool for commercial property including Lloyd’s and unauthorised foreign insurers, was $9.8 billion in calendar 2022. This was 17% higher than the premium written in 2021 and is the fifth year in a row of double-digit growth.

The loss ratio for Fire and ISR has historically fluctuated between 70% and 95%. Over the past five years it has averaged 77%. The FY21 loss ratio of 117% was primarily driven by reserve strengthening for business interruption losses relating to the covid pandemic.

Corporate property

The natural peril claims experience was very favourable in FY23 despite sustained periods of heavy rainfall as a result of the La Nina climate event. Finity expects an easing in pressure on insurers to increase their rates. It assumes a lower premium rate increase of 6% in FY24.

Business packages

Business packages is now at target profitability on an underlying basis, aided by rate increases, improvement in non-weather claims frequency and higher interest rates.

The GWP pool grew 11% to $3.8 billion in FY23, mainly from premium rises. The growth trend is expected to continue as insurers continue to reflect the high inflationary environment and higher reinsurance costs in their pricing.

FY23 has seen average premiums in the intermediated space increase by about 11% and in the direct space by around 8.5%.

Standalone liability

APRA data indicates a 12% growth in GWP for FY23, amid continuing rate increases and growth in economic activity subsequent to the pandemic.

Rate increases are expected to continue, but at a lower rate. This reflects a view that the multiple consecutive years of rate increases, as well as the favourable shift in yield curve, have started to improve insurers’ underlying profitability.

Commercial motor

Premiums surged 17% in FY23, following an already decade-high increase of 12% in 2022. This growth was fuelled by an 11% rise in premium rates as insurers responded to inflation, alongside a 6% uptick in insured vehicles.

Profitability is expected to continue to deteriorate slightly in FY2024 as claim frequency continues to increase towards pre-covid levels. This will be broadly offset by further rate increases and an easing inflationary environment.

Financial lines

Premium rates in financial lines hit the brakes in FY23 – a distinct departure from the past few years of escalating rates. Increased competition, particularly in directors’ and officers’, has even led to material rate reductions and signals a drastic shift from a hard market straight to a soft market.

But profitability is likely to be short-lived as premium rates continue to decline and upward pressure on claims looks likely with rising insolvencies, elevated interest rates, inflation pressures and a continuation of class action activity.


Cyber insurance has now reached critical mass in Australia. GWP is estimated at about $500 million and may even increase to almost $1 billion in FY24.

There have been notable increases in product take-up as well as premium rates since 2022 off the back of increased cyber incidents. However, premium rates have started to moderate.

Profitability is heavily dependent on the cyber threat environment and how reactive insurers are to emerging trends. The industry has not yet witnessed a catastrophic event beyond individual large losses, which may impact reinsurance capacity significantly.

Workers’ compensation

With further strong premium rate growth in the last year, insurers are now closing in on recommended premium rates. The claims mix has continued to shift toward longer-duration claims such as psychological injuries.

Profitability improved in FY23 and was well within the target range. Further improvement in FY24 from higher investment returns and higher premium rates should see profitability exceed target levels in FY24.