Australia’s home insurance crisis worsens – report
The number of Australian households facing home insurance affordability stress has risen by 30 per cent to 1.6 million in 2023, mainly due to higher premiums that have grown faster than wages, a report from the Actuaries Institute showed on Monday.
The report, titled Home Insurance Affordability and Home Loans at Risk, found that these households spend an average of 9.6 weeks of their gross income on home insurance, significantly higher than the average household.
In fact, the proportion of households facing home insurance premiums exceeding one month’s gross annual income rose to 15 per cent in the year to March 2024, up from 12 per cent the previous year.
The report, commissioned by the Actuaries Institute and authored by Finity actuaries, identified a nine per cent increase in median insurance premiums as a major contributor to affordability pressures.
Properties located in areas with a high risk of floods and cyclones, such as those in the top five per cent of premium-paying properties, experienced the most significant premium hikes, with increases exceeding 30 per cent.
Sharanjit Paddam, the report’s lead author, expressed concern about the growing number of households struggling to afford home insurance, due to premium increases outpacing wage growth.
While the majority of households (85 per cent) still find insurance affordable, the 1.6 million households facing affordability stress represent a significant increase from 1.24 million a year ago.
The report emphasised that the increasing risk of natural disasters due to climate change is a major reason for higher insurance premiums. Southeast Queensland, with its growing population, has the most households struggling with affordability.
However, regions like southwest Queensland, NSW’s Northern Rivers, regional Western Australia, and the Northern Territory have the largest proportion of households experiencing this issue due to their high flood and cyclone risk.
Attribution: Actuaries Institute report
Subediting: M. S. Salama
