Plan Proposed to Address Rising Home Insurance Costs in Australia

Australia's Home Insurance Affordability Crisis: A Nation in the Crosshairs

A coalition of industry stakeholders has released a proposal aimed at addressing the growing affordability challenges in Australia's home insurance market, which has been affected by increased natural disasters and rising construction costs.

The proportion of Australian households experiencing insurance affordability stress rose from 10% in 2022 to 15% in 2024, affecting an estimated 1.6 million homes.

The Cost Squeeze

Data from the Actuaries Institute shows that insurance affordability stress—defined as premiums exceeding four weeks of gross household income per year—is now a significant burden for millions.

Analytics firm Finity reports that average home insurance costs have increased by approximately 50% over five years, from $1,940 in 2020 to $2,938 by October 2025.

The Proposed Solution: A National Resilience Accord

A group including insurers, actuaries, banks, community legal centres, academics, and consumer advocates has developed the Housing Resilience Action Plan 2030.

• Key Proposal: The plan calls for the creation of a National Risk and Resilience Rating System (NRRRS).
• The Incentive: This system would link home resilience upgrades to reduced insurance premiums and lower-cost lending products.
• Government Action: The plan urges the federal government to establish a National Housing Resilience Accord within six months.

Insurance Costs by City

Finity data as of October 2025 shows the average annual home insurance costs across Australian capital cities:

Within these cities, specific high-risk regions face significantly higher premiums. Brisbane's western suburbs average $8,396, while Darwin City and Sydney's outer west/Blue Mountains region average $5,410 and $5,350 respectively.

Why are Premiums Rising?

Stephen Lau, a principal at Finity, identified two primary drivers:

• Increased frequency and severity of natural disasters: Over $1.8 billion was claimed in the first half of this year due to extreme weather events. The Insurance Council of Australia (ICA) reported that extreme weather events have cost insurers $25.3 billion since 2020, averaging $4.8 billion annually—a 38% increase from the previous five-year period.
• Rising building and labor costs: The expense of materials and skilled labor required for rebuilding and repairs after disasters has significantly increased.

Finity projects that economic losses from natural disasters could rise from $11.8 billion in 2023–24 to $40.3 billion by 2049–50.

Consumer Concerns: "No Information"

Julia Davis from the Financial Rights Legal Centre stated that consumers often receive limited information about premium changes:

"People's premiums go up and there is just no information in their renewal notice about why. Nothing tailored to their individual risk, and no information about what they could do to make their homes safer."

The Housing Resilience Action Plan includes a proposal for free home assessments to help households understand their individual risk.

Mitigation Efforts: "We Don't Have to Wait"

The Resilient Building Council (RBC) offers a free service to homeowners aimed at reducing natural disaster risks.

• Recommended actions include: Strengthening structures for flood resilience, protecting windows and roofing for storms, and implementing ember screens or clearing flammable materials for bushfire protection.
• CEO Statement: "We don't have to wait decades to make all of this happen. All this work is already underway and it just needs scaling and support."

Some homeowners have reported premium reductions after demonstrating implementation of such resilience measures.

The Looming Coverage Gap

The Australian Prudential Regulation Authority estimates that the proportion of uninsured households could rise from one in seven to one in four by 2050.

Industry Statements

• Insurance Council of Australia: "Reducing risk for the households most exposed to extreme weather is a clear priority... Without coordinated action across government, industry and communities, affordability pressures will keep growing."
• Suncorp: Stated that premiums are influenced by increasing extreme weather events, rising construction costs, and persistent inflation.
• IAG: A report from IAG and a scientific research centre highlighted escalating severe weather risks in south-east Queensland, New South Wales, and south-west Western Australia.

Government & Broader Economic Impact

The federal government did not respond to requests for comment regarding the proposed action plan.

Businesses are also being affected. BizCover data shows a near doubling of severe weather event claims in the last three years. Power outages, fires, and storm damage are among the top threats, with claims averaging $39,000 and reaching up to $200,000.