Climate change renders Australian home insurance unaffordable

Surge in claims led to an average home insurance premium increase of at least 14%.

In 2022, Australians filed claims totalling over $4.63 (A$7b) on home insurance, nearly double the previous record, due to multiple major floods on the east coast, according to the Australia Institute.

Climate change is significantly driving up insurance costs in Australia, with premiums rising far faster than most other goods and services, making home insurance unaffordable for many. 

This surge in claims led to an average home insurance premium increase of at least 14%—the highest in a decade.

In Australia’s capital cities, insurance costs have outpaced general price rises. 

For instance, in Brisbane, insurance costs have increased over five times the Consumer Price Index (CPI), and in Melbourne—relatively less impacted by climate change—by nearly three times.

Currently, more than 5% of households spend over seven weeks’ gross income on home insurance. 

“Rising insurance premiums are the here-and-now cost of climate change,” said Stephen Long, Senior Fellow at the Australia Institute.

“Impacts from climate change are non-linear. They are catastrophic in nature and traditional, linear insurance models of calculating and spreading risk are no longer fit for purpose,” Long added.

Long also noted that even in capital cities, these insurance cost increases add significant pressure on inflation.

($1.00 = A$1.51)