Claims

Insurance Claims Trends in Australia: 2026

ClaimsGateway

24 Oct 26

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min read

Five trends are shaping Australian claims in 2026. Complaints hit a record, with delay the top issue. Catastrophe losses swung back up, to almost $3.5 billion in 2025. Motor repairs are slowed by parts and labour shortages. Regulation is tightening through CPS 230 and a redrafted Code. And insurers are moving AI from pilots into claims processing.

Key takeaways

According to Insurance Business, AFCA received 119,949 complaints in 2025-26, its highest annual volume, with delay the most common issue.
According to the Insurance Council of Australia, 2025 extreme weather losses were almost $3.5 billion from 264,000 claims, against $581 million in 2024.
AFCA links motor claim delays to "industry-wide shortages in vehicle parts and skilled labour".
APRA's CPS 230 took effect on 1 July 2025, and a redrafted, enforceable Code is expected from 2028.
According to CSIRO and the Insurance Council, catastrophe claims rose nearly 50% over five years, and automated claims processing is a priority AI use case.

Are insurance complaints rising in Australia?

Yes. AFCA received 119,949 complaints across all financial products in 2025-26, the highest on record and the third year in a row above 100,000. General insurance complaints rose 5% to 36,022. Delay in claim handling was the most complained-about issue across every product, and comprehensive motor remained the most complained-about product.

Code breaches rose too. According to the Code Governance Committee, insurers reported 70,325 breaches in 2024-25, up 20.5%, as reported by Insurance Business. Of those, 59% were claims breaches.

Communication is the recurring weakness. Insurers breached the 20 business day update rule 18,350 times in 2024-25, up 67%. The AFCA and claims disputes guide looks at what drives these complaints.

How are catastrophes affecting claims?

Catastrophe claims are large and unpredictable. According to the Insurance Council, extreme weather caused almost $3.5 billion in insured losses in 2025 from 264,000 claims, across five declared events. That compares with $581 million in 2024 and $2.35 billion in 2023. Ex-Tropical Cyclone Alfred alone produced 132,000 claims and more than $1.5 billion in losses.

The swing between years is the point. A claims team sized for 2024 would have been overwhelmed in 2025. As a result, surge capacity has become a planning question, not an exception.

The cyclone pool felt it too. According to Insurance Business, Alfred generated $1.335 billion in net incurred losses for the government-backed cyclone reinsurance pool, its largest single-event loss since it began in July 2022. CSIRO and the Insurance Council expect catastrophe claims to keep growing by about 5% a year until 2050.

Why are motor claims taking longer?

Motor claims are taking longer mainly because of shortages of vehicle parts and skilled repairers. AFCA's 2025-26 general insurance review links motor claim delays to "industry-wide shortages in vehicle parts and skilled labour", including pressure from the growing electric vehicle market. Comprehensive motor remained AFCA's most complained-about product.

These are supply problems, not claims-desk problems. No claims process makes a missing part arrive sooner.

What insurers control is communication. A claimant waiting on parts still needs updates on time and an honest estimate. In addition, rejection complaints for comprehensive vehicle insurance rose 47% in 2025-26, according to Insurance Business, so clear written reasons matter more than ever.

What is changing in claims regulation?

Three changes stand out. APRA's CPS 230 has applied since 1 July 2025, treating claims as a critical operation for insurers. The General Insurance Code is being redrafted to make key obligations enforceable, expected from 2028. And ASIC continues to scrutinise claims handling under the regime that made it a financial service in 2022.

CPS 230 reaches suppliers. According to APRA, older service provider arrangements came inside the standard at the earlier of renewal or 1 July 2026. So by now, most claims outsourcing contracts are covered.

The Code redraft raises the evidence bar. According to Insurance Business, the Insurance Council planned to lodge its redraft with ASIC in late October 2026. Obligations that are enforceable need records to prove they were met. The Code claims obligations guide covers the current rules.

How is technology changing claims?

Insurers are moving AI and automation from pilots towards everyday claims work. CSIRO and the Insurance Council's August 2025 report, "AI for Better Insurance", named automated claims processing first among five priority AI use cases, alongside fraud detection. It also called for moving from proof-of-concept projects to scalable implementations, with stronger oversight.

The drivers are cost and scale. Rising catastrophe claims and customer expectations push insurers to handle more claims without proportionally more staff.

Oversight is the condition. The same report called for stronger governance, transparency and staff skills. ClaimsGateway (claimsgateway.com), which publishes this blog, covered the report in an earlier post on the CSIRO report.

For insurers weighing their options, the ClaimsGateway insurers page describes its claims platform for insurers.

Frequently asked questions

What are the biggest claims trends in Australia?

The biggest claims trends in Australia in 2026 are record complaints with delay the top issue, large and volatile catastrophe losses, motor repair delays from parts and labour shortages, tighter regulation through CPS 230 and a redrafted Code, and the move of AI from pilots into claims processing.

Are insurance complaints rising?

Yes. AFCA received 119,949 complaints in 2025-26, its highest annual volume, with general insurance complaints up 5% to 36,022, according to Insurance Business. Delay in claim handling was the most complained-about issue across every product, and comprehensive motor insurance remained the most complained-about product.

How are catastrophes affecting claims?

According to the Insurance Council of Australia, extreme weather caused almost $3.5 billion in insured losses in 2025 from 264,000 claims, against $581 million in 2024. Ex-Tropical Cyclone Alfred alone produced 132,000 claims. The swing between years makes surge capacity a planning question for claims teams.

Why are motor claims taking longer?

AFCA links motor claim delays to industry-wide shortages in vehicle parts and skilled labour, including pressure from the growing electric vehicle market. These supply problems sit outside the claims process. Insurers can still update claimants on time, give honest estimates and explain decisions clearly.

What is changing in regulation?

APRA's CPS 230 has applied since 1 July 2025, with older supplier contracts covered by 1 July 2026 at the latest. The General Insurance Code is being redrafted to make key obligations enforceable, expected from 2028. ASIC continues to oversee claims handling as a financial service.

About the author

ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.