AI and Empathy Help Australian Insurers Weather a Surge in Claims and Fraud

AI is helping Australian insurers manage surging extreme-weather claims

Extreme weather is driving a steep rise in claims across Australia. In the first half of 2025, insurers faced more than AUD $1.8 billion in claims from over 148,000 incidents, according to the Insurance Council of Australia.

Ex-Tropical Cyclone Alfred alone contributed over AUD $1.36 billion in losses, with widespread flooding in North Queensland and New South Wales adding further strain. The spike has exposed a core operational issue: handling volume while keeping service fair, transparent, and empathetic.

What's really straining operations

Customers contact their insurer at the worst moment-stressed, uncertain, and expecting quick, clear support. The challenge is to scale fast without sacrificing fairness, transparency, or empathy.

Traditional processes buckle under event-driven surges. That's why insurers are moving to intelligent, adaptive systems that flex with demand while keeping people at the center.

Where AI delivers value now

• AI triage: Prioritise urgent claims (e.g., vulnerable customers, total loss, safety risks) and route them to the right specialists first time.
• Straight-through processing: Automate simple, low-risk claims from lodgement to settlement with clear audit trails and guardrails.
• Predictive operations: Use weather signals and historical patterns to forecast demand, staff appropriately, pre-book assessors, and line up suppliers.

"Artificial intelligence is not a silver bullet, but it's already transforming the way insurers manage weather-related claims. AI-driven triage systems can prioritise the most urgent cases, automation can handle straightforward claims from lodgement to settlement, and predictive analytics can forecast demand based on weather patterns."

A recent white paper cited by Maurice Zicman notes that nearly nine in ten Australian insurers have now integrated AI into their claims processes-up 38 percent year on year. The goal: let automation clear the queue so human expertise focuses where it matters most.

Fraud risk after catastrophes

Large-scale events increase the risk of inflated repairs, staged damage, and other fraud. The Insurance Fraud Bureau of Australia estimates up to AUD $2.2 billion in annual industry losses.

"Leading CX management service providers can harness AI-driven fraud detection, image forensics and behavioural analytics to flag anomalies early. But speed must be balanced with sensitivity. False positives can erode trust with genuine claimants who are already dealing with loss and upheaval."

• Image and document forensics: Check metadata, geolocation, timestamps, and duplication across claims.
• Behavioural analytics: Spot patterns across devices, IPs, networks, and supplier relationships.
• Human-in-the-loop: Route flagged cases to specialists; communicate transparently to protect trust.

Readiness and resilience: build capacity before the storm

Insurers are investing in surge capacity, cross-insurer agreements, and partnerships with government, emergency services, and community groups. Operational readiness means claims systems that flex under pressure-through redeploying teams, using AI for volume management, and pre-positioning assessors in high-risk areas.

• Surge playbooks: Cross-train staff, set on-call rosters, and confirm supplier capacity bands.
• Network collaboration: MOUs for resource sharing; data-sharing protocols with public agencies.
• Scenario drills: Run pre-event simulations using historic weather and exposure data.

High-tech, high touch

"Technology can process a claim, but it can't comfort a family who's lost someone or suffered significant damage to their home. Empathy, active listening and clear communication remain the most powerful tools in a claims professional's skillset."

• Trauma-first service rules: Proactive outreach, plain-language scripts, and next-step summaries.
• Specialist routing: Direct vulnerable customers to trained teams; track outcomes and callbacks.
• Frictionless self-service: Offer status tracking, document upload, and appointment booking-keep humans on complex, sensitive cases.

Next-quarter implementation checklist

• Deploy AI triage on top event-driven claim types with clear urgency rules and fairness controls.
• Expand straight-through processing thresholds for low-risk claims; add audit trails and kill-switches.
• Stand up an anomaly detection pipeline across FNOL, images, supplier quotes, and payments.
• Integrate climate and weather data into weekly staffing and supplier forecasts.
• Run a surge simulation with partners; measure time-to-first-contact, cycle time, leakage, and CSAT.
• Publish a disaster response page and outbound comms templates for rapid activation.

Outlook

Insurers that weave climate data into planning, automate straightforward claims, and target human expertise to complex cases will set the pace. Industry collaboration remains essential-to fight fraud without undermining customer trust, and to build resilience frameworks that link insurers, government, and communities ahead of the next event.

If your claims and operations teams are building AI capability, explore practical upskilling paths here: AI courses by job.