Australian Homeowners Struggling to Afford Insurance as Climate Risks Grow, Report Says

Home insurance is becoming unaffordable for a growing number of Australian households as increased climate threats drive up their premiums, potentially putting billions of dollars in mortgage loans at risk, a report said. As of March 2024, 15% of Australian households were experiencing home insurance affordability stress, which is defined as having premiums that cost more than four weeks’ of their incomes, the report from the Actuaries Institute found. That is equivalent to 1.61 million households, compared to 1.24 million found to be facing affordability stress a year ago – an increase of 30%. Rising insurance costs have fuelled inflation in Australia and there are signs that some homeowners can no longer afford to protect their homes due to climate-related risks and high construction costs. “Unfortunately, we expect this will continue because of the overall increasing risk of natural disasters associated with climate change, which will continue to put upward pressure on premiums,” said the report’s lead author Sharanjit Paddam.

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