This upward trend began in 2017 and is largely attributed to a worsening claims experience. Bodily injury claims, in particular, have been a significant driver of increased premiums, with average finalised claim sizes growing by 5.5% annually since 2013. Work injury claims have doubled in size compared to other bodily injury claims, contributing to the overall cost pressures.
In response to these rising costs, many businesses have opted for policies with higher deductibles, effectively assuming more risk to manage premium expenses. However, this approach may not be sustainable in the long term, especially for small and medium-sized enterprises (SMEs) that may lack the financial resilience to absorb significant losses.
The data also highlights a rise in psychological claims, which further exacerbate overall inflation in claims costs due to social, legal, and medical factors. This trend underscores the need for comprehensive reforms to address the underlying issues contributing to escalating insurance costs.
As insurers and businesses navigate these challenges, ongoing data and analysis from the NCPD will be crucial in shaping future strategies and solutions. Stakeholders are encouraged to engage in discussions on potential reforms to ensure the sustainability and affordability of public liability insurance for all Australian businesses.
