Home insurance bills are soaring as climate risks grow. The government should step in.

21 Aug 2023

Paula JarzabkowskiCorinne Unger and Katie Meissner write for The Conversation
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The Actuaries Institute of Austalia has just confirmed what many Australian households already know – home insurance is increasingly unaffordable.

It found average premiums climbed 28% in the year to March, while premiums for higher-risk properties, such as those in flood-prone areas, climbed 50%.

The institute also found 12% of Australian households – 1.24 million – are experiencing extreme home insurance affordability stress, defined as paying more than four weeks of gross household income on premiums.

Twelve months ago, this figure was 10%, or 1 million households.

Arial view of a flooded Brisbane suburbWhile in the past affordability had been recognised as a problem affecting vulnerable Australians, it has got to the point where it is hitting households across the socio-economic spectrum. And not only in Australia.

Insurers are increasing premiums in locations at high risk of climate-related damage throughout the world and even withdrawing home insurance completely in places such as California and Florida.

The high premiums are spreading to households in lower-risk locations through a complex interconnected system of rising private reinsurance charges (insurance for insurers), more frequent and worse weather events, and increasing rebuilding costs.

Read the full article at The Conversation