Weather Claims Cost $12.4 Billion in 2026 Financial Year
Higher catastrophe costs and 109 weather events are putting upward pressure on premiums for property owners.
Updated on Oct. 22, 2026 in Insurance
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Insurance Australia Group paid out $12.4 billion in claims during the 2026 financial year following 109 separate weather events in Australia and New Zealand. The company reported a net profit of $1.022 billion as extreme weather conditions significantly impacted the industry.
Why it matters
Heightened catastrophe costs have nearly exhausted natural perils allowances for insurers, signaling continued pressure on premiums for homeowners and commercial property owners. As weather-related claims remain high, insurance providers are increasingly balancing these costs against business growth and operational investments.
Insurance Australia Group paid $12.4 billion in total claims during the 2026 financial year across 109 weather events. These catastrophe costs closely matched the company's $1.169 billion in net natural perils claims, nearly reaching the full $1.216 billion allowance set for the year.
The players
Insurance Australia Group
A major insurance provider offering direct and intermediated property and casualty coverage across Australia and New Zealand.
The details
Insurance costs are driven by the frequency and severity of extreme weather, with 109 events across Australia and New Zealand forcing massive claim payouts. Cyclone Alfred alone resulted in approximately $200 million in net claims for the company, triggering over $1 billion in payments from reinsurance pools. Companies are currently managing these volatility spikes while maintaining profitability through premium adjustments and operational shifts like the integration of AI tools for 80% of the workforce.
Timeline
Extreme weather events across the industry cost $4.8 billion in 2025.
Insurance Australia Group acquired the RACQ Insurance book in September 2025.
Cyclone Alfred impacted the region in March 2026.
The 2026 financial year concluded on June 30, 2026.
Growth projections for gross written premiums are targeted for FY27.
Money Landscape
The insurance industry is navigating an environment defined by high catastrophe costs, with extreme weather accounting for $4.8 billion in industry losses during 2025. This fiscal pressure follows established patterns for natural disaster risk management in the region, centered on the use of the Australian cyclone reinsurance pool.
Homeowners in regions prone to extreme weather may face continued premium increases as insurers work to balance perils allowances with rising catastrophe claims. Consult with a qualified insurance professional to review your current coverage limits and assess if your property's risk profile warrants adjustments to your policy.
The takeaway
Large-scale weather events are exerting persistent pressure on the financial stability of the property insurance market. Review your current insurance documentation annually to ensure your coverage remains adequate for your property's location and replacement costs.
Further reading
For broader guidance on managing coverage risks, see Insurance.
Source note: This article includes information reported by Insurance Business.
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