IndustryPerformance
The strongest industry profitability achieved over the past decade
19%
13%
for FY26
We forecast 13% ROE for FY26, returning the industry to within the ‘through the insurance cycle’ target range (10-15%).
We expect continued moderation in premium growth over the coming year (and in some classes, reductions in premiums), which will place upward pressure on the COR. This, alongside an increase in natural peril losses to long-term historical averages, lower prior year reserve releases and lower expected investment returns, results in a forecast FY26 ROE that is 6 points below last year’s result.
Industry Premiums
GWP grew by 6% in FY25. This is lower than the double-digit growth in the previous three years, due to lower premium increases for Personal Lines and the soft market conditions across several Commercial Lines classes. It was another favourable reinsurance market for direct insurers, with the cession rate reducing for the second consecutive year.
We are forecasting a 5% increase in GWP for FY26. The moderation of premium rates observed in FY25 is expected to continue into FY26, with premium growth slowing across most classes. Overall, we expect positive volume growth of 2% across all classes in FY26, similar to FY25. Sum insured growth and rate increases are forecast to increase the premium base by a further 2.5%.
Industry Claims
The industry net loss ratio was 65% in FY25, representing a 4 point improvement compared to FY24. This improvement was owing to favourable weather, higher reserve releases, and earn-through of rate increases. Personal Lines classes drove the improvement, whilst the Commercial Lines loss ratio remained similar to last year.
We’re forecasting a 68% net loss ratio in FY26, a 3 point increase from FY25 reflecting further rate softening (particularly for some Commercial Lines classes), a return to long term average natural peril losses, and lower reserve releases.
Industry Profitability
The FY25 ITR margin was 4 points higher than FY24 – and the strongest in a decade – due to the lower loss ratio and stronger investment returns, offset by a slightly higher expense rate. Personal Lines classes improved by around 2 points overall, whilst Commercial Lines deteriorated slightly.
We forecast a 4 point reduction in ITR in FY26 reflecting the soft market conditions in Commercial Lines, reversion to ‘average’ natural peril losses, lower reserve releases, and lower investment returns.
Meet the authors
Pravesh Ponna
Editorial, Industry performance and forecasts
John Jeaitani
Editorial, Industry performance and forecasts