How weather events are driving business insurance premiums

The link between a changing climate and what your business pays 

The industry has been bracing for more weather-related claims for years, and the numbers keep confirming it. Extreme weather cost insurers around $4.8 billion in insured losses across 294,000 claims in 2025, with more than $4.1 billion of that coming from Queensland (Insurance Council of Australia). To put that in perspective, insured losses were around $585 million in 2024 and $2.35 billion in 2023 — a swing that shows just how hard these costs are to predict from one year to the next. The average cost per claim also jumped 39 per cent, to $16,471. 

This isn't only about inflation, though rising rebuild and repair costs play their part. It's the frequency and severity of events — floods, cyclones, hail and heat — landing more often and hitting harder. For a business, that combination shows up at renewal, whether or not you've made a claim.

Why your premium can rise even when you haven't claimed 

One of the questions our brokers hear most is a fair one: “We didn't claim, so why has our premium gone up?” Most of the time the answer sits just behind your insurer, in the reinsurance market. 

Reinsurance is insurance for insurers — the cover they buy so they can keep paying claims when a major event sends thousands of losses through at once. It's bought on global markets, and those markets move quickly. After a run of costly years, reinsurers took a harder look at Australia's risk and repriced sharply in 2023, with Australian insurers facing cost increases of up to 30 per cent (Insurance Council of Australia). Those costs flow through to local premiums. 

The Actuaries Institute estimates that reinsurance saves the Australian industry between $23 billion and $70 billion in capital it would otherwise have to hold, and that the industry spent around $2.5 billion in the 2025 financial year reinsuring against natural peril catastrophes. More recently the picture has eased a little: after two favourable years, mid-2025 reinsurance renewals actually delivered small rate reductions. But the underlying trend — more frequent, more severe secondary perils like hail, flood and bushfire — keeps upward pressure on the system. It's why your premium can move on events that happened nowhere near you.

The events driving costs across eastern Australia 

2025 read like a catalogue of the perils east coast businesses now plan around. Five events were declared significant or catastrophic: the North Queensland floods in February, ex-Tropical Cyclone Alfred in March — which brought cyclone conditions to the Brisbane region for the first time since 1974 and alone drove more than 132,000 claims and over $1.5 billion in losses — the Mid North Coast and Hunter floods in May, and two severe storm and hail events across South-East Queensland and NSW in spring. The late-November storms and hail were especially costly, accounting for more than 70,000 claims and $814 million on their own (Insurance Council of Australia). 

For insurers, that kind of clustering changes how risk is viewed — particularly in regions exposed to repeated events — and it feeds directly into how cover is priced and where appetite tightens.

2026 hasn't eased the pressure — and business bore a real share 

The new year brought no reprieve. In the first fortnight of January, severe bushfires burned across around 400,000 hectares of Victoria, prompting an Insurance Catastrophe declaration covering 18 local government areas (Insurance Council of Australia). What stood out for businesses was where the losses fell: of the roughly $860 million in insured losses, about 68 per cent came from commercial lines — an unusually high share for an Australian bushfire, reflecting how hard the fires hit farms, rural operations and regional businesses rather than only homes. These were fast-moving grassland fires, a different pattern to the forest fires of 2019-20, and a reminder that commercial and agricultural exposure can sit right in the firing line. 

At almost the same time, ex-Tropical Cyclone Koji crossed the north Queensland coast between Ayr and Bowen, then tracked inland and dumped enough rain to trigger major flooding through the Pioneer catchment south of Mackay and beyond (Bureau of Meteorology). Towns were isolated, thousands of properties lost power and graziers reported heavy stock losses. For operators in the state's north, it was another disruption in a run that hasn't really let up. 

We've walked plenty of clients through the aftermath of events like these, and the pattern is consistent: the businesses that recover fastest are usually the ones whose cover already reflected how and where they actually operate — before the loss, not after.

Where your premium actually goes 

It helps to know what you're paying for. A commercial premium isn't just the expected cost of your own claims. It also carries the insurer's share of reinsurance, their operating costs and a margin — plus government taxes and levies, which can add 20 to 40 per cent on top before you reach the final figure. Understanding that breakdown makes the moving parts easier to follow: when reinsurance hardens or a state adjusts its levies, your premium can shift even if your own risk profile hasn't. 

Practical steps to manage risk and premiums 

Weather-driven costs sit largely outside any single business's control, but there's still plenty you can influence. Insurers are increasingly willing to review a premium when a business can show it's actively managing its exposure, rather than only buying cover after the fact. 

Looking ahead 

The gap between businesses that are properly covered and those that aren't is widening, and every major season seems to reinforce it. Many of these pressures — a changing climate, a global reinsurance market, rising rebuild costs — sit beyond any one business's reach. But understanding your exposure, reducing risk where you can and structuring your cover carefully will always put you in a stronger position than finding out at claim time. 

If you'd like advice you can trust on your risks, your policies and your next steps, talk to a Regional broker. We work with businesses right across eastern Australia and Tasmania, and we can review where you stand and how your cover responds as conditions keep changing. You'll deal with a real person who knows your industry.