Major insurers bank bumper profits and their CEOs take home huge salaries as premiums rise

Complaints have skyrocketed as major insurers hike premiums during a cost of living crisis despite posting millions of dollars in profits, and CEOs are banking big bucks.

Exclusive: Major insurers are blaming climate change for hiking insurance premiums in the middle of a cost of living crisis despite posting hundreds of millions of dollars in profits.

The number of complaints about skyrocketing insurance premiums has doubled in the past year as families are pushed to the brink amid high inflation and interest rates.

Meanwhile, the bosses of the nation’s three largest insurers have all banked paypackets worth millions of dollars including annual bonuses.

The Australian Financial Complaints Authority said complaints about home building and contents insurance premiums had doubled in the latest financial year.

“During FY24, these complaints made up 4 per cent of all home building and contents complaints,” said a spokesperson.

“Recently, this figure has risen to approximately 8 per cent.”

The independent ombudsman last financial year received 7,358 complaints relating to home building insurance and 1,582 relating to contents insurance.

Financial Counselling Australia co-chief executive Peter Gartlan said 170,000 people sought assistance for financial hardship in 2024, including a rising number of double income households.

Mr Garland said rising home insurance premiums were increasing pressure on families struggling with mortgage repayments, utility bills and petrol costs.

“Anyone that has a home loan or owns a home knows that the cost of insurance has skyrocketed over the past 24 months,” he said.

IAG CEO Nick Hawkins in Sydney. Picture: NewsWire / Nikki Short

Suncorp Group recorded a profit of $582 million, an increase of 5.4 per cent, while IAG posted a profit of $898 million, an increase of 7.9 per cent, according to the companies’ 2024 half year financial results.

Meanwhile global insurance company QBE posted a net profit of $1.3 billion.

The bumper profits paid millions in dividends to shareholders and, while there is no suggestion of any wrongdoing, boosted the pay packets of chief executives.

IAG chief executive officer Nick Hawkins took home $5.23m while Suncorp Group boss Steve Johnston banked $6.8 million including a one-off $2m bonus for Suncorp Bank’s transition to ANZ.

QBE chief executive officer Andrew Horton’s pay packet was $4.59m.

Brisbane Based Suncorp Group Chief Executive Officer and Managing Director Steve Johnston. Picture: Brendan Radke

MCG Quantity Surveyors Marty Sadlier said insurance companies were profit driven businesses that ultimately viewed policy holders as transactions and shareholders as clients.

“Shareholders are the true client, you’re a transaction and that means they have to make money off you,” he said.

Mr Sadlier said a lack of competition in the sector was fuelling premium rises after catastrophic weather events such as floods in 2022 slashed insurers’ appetite for risk.

Mr Sadlier said previously if properties were damaged in a weather event such as a hailstorm, all premiums in a postcode would rise regardless of whether or not the holder’s property was damaged.

He said the same principle now applied to a much larger area after floods devastated northern NSW and fires ravaged the state’s south coast.

“The geographical area is now very big, if we have a flood event on the east coast of Australia then premiums across the board go up,” he said.

“Someone taking an insurance premium is trying to cover the cost of underwriting an event thousands of kilometres away.”

An Insurance Council of Australia spokesperson said premiums were rising due to increasing natural disasters, property values, construction and repair costs and inflation.

“Australian insurers lost more than $650 million on home insurance policies over the four years to 2023,” said the spokesperson.

“In 2022-23, states taxes collected more from insurance customers ($7.7 billion) than insurers made in profit ($4.6 billion).”

QBE Group CEO Andrew Horton. Picture: Britta Campion

A Suncorp Group spokesperson said the company earned $203m from consumer insurance over July and December 2023, which included home, motor and landlord insurance.

An IAG spokesperson said the company had supported 20,000 customers with financial support in the past financial year including waiving and deferring premiums and excess payments.

“We encourage customers experiencing financial vulnerability to contact their insurer to discuss the tailored support measures available to them,” said a spokesperson.

A QBE spokesperson said home insurance premiums only represented a small part of the company’s Australian portfolio and premiums were calculated based on an assessment of risk.

“This approach considers factors such as the frequency and severity of potential natural hazards, including floods and bushfires,” said a spokesperson.

“Over time, enhanced data and natural hazard modelling have enabled us to refine this approach and identify areas where risk mitigation efforts are most needed.”

Originally published as Major insurers bank bumper profits and their CEOs take home huge salaries as premiums rise