Australian insurance stocks suffered significant losses on Monday after Peter Dutton, leader of the Liberal Party, threatened to break up the country’s major insurers, accusing them of exploiting consumers. The statement comes ahead of Australia’s federal elections, which are expected by May.
In an interview with Sky News, Dutton expressed concerns over the practices in the insurance industry, claiming that Australians are paying excessively for insurance, leading many to forgo coverage altogether. He vowed that if his party were to win the upcoming election, his government would intervene in the insurance market to ensure consumers receive fair treatment.
“In the insurance market, we will intervene to make sure that consumers get a fair go because at the moment people are paying too much for their insurance, and what’s resulting is that people aren’t taking out insurance,” Dutton said during his Sunday broadcast.
Australia’s insurance market is dominated by major companies such as Suncorp Group, Insurance Australia Group (IAG), and QBE Insurance. Following Dutton’s comments, shares of these companies saw sharp declines. Suncorp’s stock plummeted 21.3%, marking its lowest point since May 2024 and its biggest drop since June 2020. IAG’s shares fell by 4.1%, reaching a three-month low, while QBE dropped by 1%.
The timing of Dutton’s remarks coincides with the growing discontent toward the incumbent Labour government, as recent opinion polls suggest that the opposition Liberal-National Coalition has gained an edge. The federal election, which is expected within three months, has brought increasing scrutiny on the practices of the insurance sector.
Last week, IAG reported its first-half earnings, which fell short of analysts’ expectations for both top-line growth and dividends, while Suncorp shares began trading ex-dividend on Monday.
Market analyst Tim Waterer from KCM Trade commented that Dutton’s remarks added to the already negative sentiment surrounding insurance companies. “While at this stage it remains just an idea that has been floated, the comments did demonstrate that insurers and their practices have caught the attention of the opposition leader and therefore could come under closer policy scrutiny down the track.”
The Australian insurance industry has faced criticism due to rising premiums, with data from the Australian Bureau of Statistics revealing a 16.4% increase in premiums over the past year, marking the largest rise in approximately 30 years. This surge in insurance costs comes amid a broader cost-of-living crisis, with higher mortgage repayments stretching household budgets.
Andrew Hall, CEO of the Insurance Council of Australia, called for action to address the issue, suggesting that state governments should do more to alleviate the burden on consumers. “Insurance customers need to demand a better deal from state governments,” Hall said. “State and territory governments collect more tax on insurance products than insurance companies make in profit. The abolition of state insurance taxes would reduce premiums by 10 to 30%, providing immediate cost-of-living relief.”
The ongoing debate surrounding the insurance sector and Dutton’s threat of intervention has raised concerns among investors about the future regulatory landscape for the industry, particularly as the federal election draws nearer.
