The Australian insurance market continues to provide a highly diverse and mature jurisdiction with regulation and adaptation remaining a priority as growth of the industry continues. We expect 2026 to bring an ongoing emphasis on better regulation for key industries such as construction and a focus on changes to improve consumer protections. Class action activity will remain a feature in Australia but with an ongoing switch of focus to product liability and consumer actions.
Highlights from 2025 and forecast for 2026
Financial Services Regulation
Continued regulatory scrutiny of the insurance and financial services industry resulted in Australia's financial services regulator, the Australian Securities and Investments Commission (ASIC), doubling investigations and almost doubling the number of proceedings commenced in 2025.
ASIC will continue to focus on investigation and enforcement with new priorities to include “claims and complaint handling by insurers”, investigation and prosecution of insider trading and auditor misconduct. ASIC will continue to focus on enduring priorities including governance and directors' duties and systemic compliance failures by large financial institutions.
Noteworthy legislative changes
On 30 October 2025, The Civil Liability (Wrongs) (Organisational Child Abuse Liability) Amendment Act 2025, was passed in the ACT and is awaiting notification. The Bill responds to the High Court’s decision in Bird v DP (a pseudonym) [2024] HCA 41 and intends to extend organisational vicarious liability for child abuse by both individuals “akin to an employee” and individuals “associated with an organisation”. Similar legislation is expected to be introduced in VIC. A similar bill has been introduced in NSW but is in “limbo”.
In June 2025 an amendment to the Privacy Act 1988 (Cth) created a new statutory tort of “serious invasion of privacy” and allows an individual to sue another person or organisation for up to AU$478,550 arising from harm (or seek other remedies such as an injunction), if they suffered:
- either by intrusion upon seclusion (e.g. physical or digital intrusion into private space), or
- misuse of private information (e.g. unauthorised disclosure or use of personal data).
Construction
Of particular interest to construction liability insurers was the interlocutory decision that installing non-compliant cladding material was “property damage”- see The Owners – Strata Plan No 91086 v Fairview Architectural Pty Ltd (No 3) [2023] FCA 814. The decision was endorsed in Insurance Australia Limited t/as CGU Insurance v Capral Limited and Fairview Architectural Pty Limited [2025] FCAFC 46. We have already seen a number of new notifications to liability insurers in the wake of these decisions.
Legislative changes to improve construction industry standards remain an important theme in Australia. In NSW, obligations imposed by the Design and Building Practitioners Act 2020 (DBP Act), continue to be enacted. Notably, obligations for compulsory PI insurance for some construction professionals will come into force in 2026. It remains to be seen whether the Building Bill introduced in 2024 and set to overhaul/consolidate key existing construction legislation (including the DBP Act) will be progressed.
Class actions and consumers
In the last few years Australia has seen a shift in focus in class actions from financial services/shareholder class actions to product liability and consumer actions. We expect this to continue as litigation funders and law firms continue to find new and novel ways to enact and fund class actions. Environmental and infrastructure/construction class actions are also on the rise and we expect this to continue.
The Insurance Council of Australia is expected to release a revised General Insurance Code of Practice in early 2026. Improving consumer protection and customer experience will be a focus in the revised code and will take account of research into extreme weather and disaster response and improving support for effected customers.
Conclusion
Australia saw a wealth of legislative and common law activity which will continue to shape the insurance industry into 2026 and beyond. Whilst heavy regulation and change can be challenging in the short-term, we expect the changes enforced to bring further increases in standards and certainty for insurers and the insurance industry generally.
