Background: Insurance Australia Group (IAG) and Suncorp Group are two of Australia's biggest general insurers, collectively covering millions of homes, cars, and businesses across the country. IAG alone owns major insurance brands like NRMA Insurance and CGU, with a market cap of more than $19 billion on the ASX.

What happened: Last week, IAG's CEO warned that double-digit insurance premium increases could continue "for some time". There's a perfect storm of rising costs:

• Rising construction costs
• Ongoing skilled labour shortages
• More frequent natural disasters are all pushing claims costs higher.

What else: In fact, insurance costs tied to natural disasters were 67% higher between 2019 and 2024 compared to the previous five years - and those costs are expected to grow 10x by 2050. And as rebuilding homes becomes more expensive, insurers are increasingly passing those costs directly onto consumers.

What's the key learning?

💡 Your insurance premium isn't based on what you paid for your house... it's based on what it would cost to rebuild it from scratch tomorrow.  When the cost of concrete, timber and skilled labour rises, insurance premiums tend to follow.

💡 Right now, all of those costs are climbing at once. Australia's construction costs went up by more than 40% between 2020 and 2024. And with an undersupply of tradespeople in Australia, the cost of engaging skills tradespeople grows each year.

💡 Insurers roll these higher costs into their pricing, add their profit margins on top... and pass the increase onto customers. So unfortunately, there's little sign of premiums falling anytime soon.