The general insurance industry made a $132 million net profit in the December quarter, taking its year total to about $5.8 billion, according to Australian Prudential Regulation Authority data.

In 2024, the industry’s profit was $6.8 billion.

Severe hailstorms in October and November hit the December-quarter performance, cutting the industry’s underwriting earnings to $272 million from $2.28 billion a year earlier.

The hail impact was particularly acute in the householders line, which slumped to a $1.077 billion underwriting loss after a year-earlier $218 million gain.  

Amounts recoverable from reinsurers in the quarter surged to $1.79 billion from $354 million as quota share and other reinsurance protection measures kick in.

KPMG partner Scott Guse says the December numbers “signify last quarter was a pretty horrendous [one] for the industry, and why was it so bad? I think I’ll describe it as death by a thousand cuts.”

He says the quarter’s net profit made the period the fifth worst, as tracked by APRA data.

“We didn’t have a major, major [cat] event. We had multiple medium-sized events and ... a lot of the reinsurance protection that companies took out [for cat events] wasn’t activated.

“If you have a big [cat] event, it goes straight into the reinsurance protection and you get it back, whereas if you have multiple small and medium events, it just doesn’t get to that catastrophic reinsurance protection … and it shows up in the results.”

There is a silver lining for insurers, Mr Guse says.

“When the companies place their reinsurance [cat] programs for next year, they are not going to be affected by large reinsurance recoveries. In other words, that increase from reinsurance premiums is not likely to happen … it’s early days but it’s likely to be flat.”

Taylor Fry principal Scott Duncan says the December and March quarters are typically tough for the householders line, as they coincide with Australia’s cyclone season and increased risk of severe storms.

The December result for householders reflects the severe hailstorms that hit southeast Queensland and northern NSW in October and November, he told insuranceNEWS.com.au.

“I think what you will see come out of the December results is a reassessment of natural hazards costs by region. It will be interesting to see what impact that has on the natural hazard allowance going forward. All eyes will be on the March-quarter results for householders.”

In commercial lines, Mr Duncan says, the soft market continues.

“We’ve seen rate reductions coming through for commercial property, public liability and cyber in particular,” he said. “And if we look at the stats, there’s lower top-line performance. So, for commercial property, GWP reduced by 3%; for public liability that was 2% relative to the December 2024 quarter. The big mover was cyber,where GWP was down 17%.

“I would say these cycles tend to last a few years and there is heightened competition in the commercial space now.”