The insurance industry has attributed these rising premiums to a range of factors, including the effects of climate change and inflation. These factors have led to losses of up to $5 billion for insurers due to natural disasters such as floods, prompting them to try to mitigate future risks by raising premiums.
The Insurance Council of Australia has noted that insurers are working with authorities in a Commonwealth-funded partnership to find ways to reduce the burden on homeowners. The council also pointed out that changes to council flood maps may affect premiums, resulting in more significant increases for some homeowners in the coming months.
Rodney Horton, a resident of Bundaberg, is one such homeowner who has seen his insurance premium increase by 100% in less than three years. Although his property has never been affected by floods, he now finds it challenging to pay the rising premiums, which are the biggest drain on his monthly budget.
Market analyst Chris Ford believes that the worst shocks are yet to come, as changes to council flood maps are likely to affect premiums significantly. While no home in Australia is technically uninsurable, the rising cost of insurance means that it is becoming unaffordable for some people. In New South Wales, for example, one homeowner faced a premium of over $20,000.
To address the issue, a new Commonwealth-funded partnership between insurers, politicians, and climate authorities has been established, called the Hazards Insurance Partnership. Its primary goal is to reduce the pressure on premiums. Insurance Council CEO Andrew Hall has called on governments to reduce the taxes included in premiums to make insurance more affordable for Australians.
In the meantime, some homeowners are taking measures into their own hands to reduce the impact of flooding on their properties. Many are raising or retrofitting their homes to mitigate the risk of damage. With rising insurance premiums, this may be the only option for some Australians who want to protect their homes from future natural disasters.
