APRA Reports Surge in Public Liability and Professional Indemnity Insurance Costs

According to the NCPD report, public liability insurance premiums have surged by 40% since 2015, outpacing general inflation rates. This rise is largely attributed to worsening claims experiences, particularly in bodily injury claims, which have seen average finalised claim sizes grow by 5.5% annually since 2013. Work injury claims, in particular, have doubled in size compared to other bodily injury claims, contributing significantly to cost pressures.

Similarly, professional indemnity insurance premiums have increased by 27% since 2015, with large and corporate businesses facing the steepest hikes. While finalised claims costs have remained stable, newer data suggests that incurred costs are trending higher, indicating potential future increases in premiums.

In response to these rising costs, many businesses are opting for policies with higher deductibles, effectively shifting more risk onto themselves to manage expenses. This approach, however, may not be sustainable in the long term, especially for small and medium-sized enterprises (SMEs) that may lack the financial resilience to absorb higher deductibles.

Industries such as construction, retail trade, and mining are particularly affected by these trends. As insurers and businesses navigate these challenges, ongoing data and analysis from the NCPD will be crucial in shaping future strategies and solutions to ensure the sustainability of the insurance market and the protection of Australian businesses.