Extreme Weather in 2025: What Commercial Property Owners Need to Rethink About Insurance 

There’s been no shortage of commentary around commercial property in 2025. Transaction volumes picked up, confidence returned in parts of the market, and investors were once again willing to make long-term plays, particularly across industrial assets and growth regions like Queensland. 

At the same time, 2025 delivered another reminder that commercial property risk doesn’t move in neat market cycles. 

Extreme weather did real damage. Not theoretical risk. Not modelling assumptions. Actual insured losses, operational disruption, and difficult insurance conversations. 

According to the Insurance Council of Australia, declared extreme weather events caused close to $3.5 billion in insured losses in 2025. Flooding, cyclones and major hailstorms affected commercial buildings across multiple states, often more than once. 

For commercial property owners, the takeaway is uncomfortable but necessary: 

Market activity doesn’t reduce insurance risk. In many cases, it quietly increases it.

When Commercial Property Changes, Risk Changes Too 

Buying, selling or repositioning a commercial property almost always changes the risk profile — even when the building itself hasn’t changed much at all. 

New tenants bring different exposures.
New locations introduce different weather patterns.
Higher asset values push reinstatement costs up faster than most owners expect. 

From an insurance perspective, this is where problems usually start. Policies are renewed on autopilot, sums insured lag behind reality, and weather exposure isn’t revisited until a claim forces the issue. 

And by then, it’s too late to fix it cheaply. 

Extreme Weather Is No Longer an “Exceptional” Event 

One of the clearest lessons from 2025 is that extreme weather is no longer an occasional interruption to business operations. 

It’s recurring. 

Hailstorms alone accounted for a significant share of claims, particularly for industrial and retail properties with large roof areas. Flooding events in Queensland and northern New South Wales exposed weaknesses in older drainage systems and building layouts that were never designed for the rainfall now being experienced. 

What often surprises property owners is not that damage occurs — it’s how insurers respond once it does. 

After a major weather event, insurers tend to look much more closely at: 

• Roof age and materials 

• Maintenance records 

• Flood mitigation measures 

• Previous claims history across the portfolio 

Even well-maintained properties can face tougher conditions at renewal if the broader loss environment has shifted. 

Where Commercial Property Insurance Commonly Falls Short 

At Barrack, we regularly review insurance programs that look fine on paper but struggle under real-world pressure. 

Some of the most common issues we see include: 

Underinsurance

Rebuild costs rise quickly after widespread weather events. Labour shortages, materials pricing and compliance requirements all push reinstatement values higher. If sums insured haven’t been reviewed recently, shortfalls are common. 

Assumptions about flood cover

Not all flood definitions are equal. Sub-limits, exclusions and waiting periods vary widely, and many owners don’t realise the practical impact until water is already inside the building. 

Portfolio concentration risk

Holding multiple assets in the same weather-exposed region can amplify losses from a single event. This can affect claims outcomes and future insurer appetite across the entire portfolio, not just the damaged site. 

None of these issues are unusual — but they are expensive when left unaddressed. 

Resilience Is Becoming an Insurance Issue, Not Just a Design One 

There’s still a tendency to think of resilience as something relevant only during construction or refurbishment. 

That’s changing. 

Insurers are paying closer attention to flood mitigation measures, roofing upgrades, drainage improvements and stormwater management. Properties that can demonstrate proactive risk management are generally in a stronger position when insurance terms are reviewed. 

From a practical insurance standpoint, resilience can: 

• Reduce loss severity 

• Improve claim outcomes 

• Support more stable pricing over time 

• Protect long-term insurability in weather-exposed areas 

It doesn’t eliminate risk — but it does make that risk more manageable. 

Why Specialist Insurance Advice Matters More Than Ever 

Insurance is often treated as a fixed cost of owning commercial property. In reality, it’s one of the most dynamic parts of the risk profile. 

At Barrack, our focus is on helping commercial property owners understand how weather risk, building characteristics and insurer behaviour intersect — not just at renewal time, but across the life of the asset. 

That means: 

• Reviewing insurance in line with asset changes, not just anniversaries 

• Stress-testing cover against realistic weather scenarios 

• Identifying gaps before a claim exposes them 

• Helping owners make informed decisions about resilience and risk retention 

Good insurance outcomes rarely happen by accident. They’re usually the result of preparation. 

Looking Ahead 

If 2025 made one thing clear, it’s that extreme weather is now a standing consideration for commercial property owners — not a once-off disruption. 

Understanding weather exposure, reviewing insurance programs properly, and investing in resilience won’t prevent storms or floods. But they can significantly reduce the financial and operational fallout when those events occur. 

And that’s where insurance, done properly, earns its place. 

If you’d like to understand better how exposure to extreme weather affects your commercial property insurance, speaking with a specialist broker can help clarify where risks and gaps may lie. You can learn more here or reach out to a broker directly here