According to the Climate Council, one in 25 properties will effectively become uninsurable by 2030, a worrying trend that homeowners and buyers can no longer afford to ignore. The costs of insurance premiums have already taken a toll on many Australians, including Judith and Paul Collins from Buxton in the NSW Southern Highlands, who were forced to flee their home before it burned down. Initially hopeful that their insurance payout would cover the rebuild costs, the couple was left heartbroken when they received almost $30,000 less than they expected due to their attempts to cut costs on their premiums.
Their situation is not unique, as many Australians struggle to cope with the rising costs of home insurance premiums. For example, Susan Conroy, who lives in Lismore in the NSW Northern Rivers region, renewed her property insurance just before the biggest flood in modern Australian history inundated her town. Despite the rise in costs, many homeowners are finding themselves unable to move to safer areas or even afford to rebuild on their current property due to high insurance costs and housing expenses.
The rising costs of insurance premiums are a direct result of the climate-related risks Australia is facing. Insurers are re-rating Australia due to the extreme weather events the country has experienced, including floods, cyclones, and fires. The cost of storms and floods since January 2020 has reached $12.3 billion from 788,000 claims, while the February to March floods in 2022 alone have already cost more than $5.65 billion, making it the most expensive natural disaster in Australia’s history. These disasters have resulted in many Australians facing unaffordable insurance premiums, with some people in flood-prone areas reportedly paying $20,000 to $30,000 per year for home insurance.
Despite the rising costs, insurers want to keep insurance affordable, as it is in their interests to have as many people in the insurance pool as possible. However, with the worsening extreme weather, insurers are facing mounting reinsurance rates worldwide, further exacerbating the costs for homeowners and buyers.
As the cost of living in Australia continues to rise, homeowners and buyers are facing an uncertain future. The rising costs of home insurance premiums have left many Australians unable to afford adequate coverage, leaving them vulnerable to the effects of climate change. To avoid becoming a statistic, it is crucial that homeowners and buyers take action now to assess their property's risk and find ways to make insurance more affordable. Whether it's through installing fire-resistant materials or moving to safer areas, taking steps to mitigate risk can help Australians weather the storm of rising home insurance premiums.
