Australia's Home Insurance Costs Soar Amid Natural Disasters and Rising Expenses
Home insurance costs in Australia have significantly increased in recent years, largely due to a rise in natural disasters and escalating building and repair expenses. Since the Black Summer bushfires, some homeowners have seen their annual premiums nearly double, with some companies refusing to insure properties in high-risk areas.
The average cost of home insurance across Australia increased by 51 percent over the past five years.
National Trends in Home Insurance Costs
According to analytics firm Finity, the average cost of home insurance across Australia increased by 51 percent over the past five years. In 2020, the average cost was $1,940, rising to $2,938 by October of the previous year.
City-Specific Premium HotspotsCities with the highest average annual home insurance costs (as of October 2025 data from Finity) include:
- Darwin: $4,015
- Sydney: $3,964
- Brisbane: $3,872
- Canberra: $2,622
- Melbourne: $2,520
- Hobart: $2,268
- Perth: $2,203
- Adelaide: $2,042
Certain high-risk regions within these cities experience even higher premiums. Brisbane's west averages $8,396 annually. Darwin City and Sydney's outer west/Blue Mountains region also face substantial costs, averaging $5,410 and $5,350, respectively.
Factors Contributing to Premium Increases
Stephen Lau, a Finity principal, identified two major drivers for the price hikes:
- Increased frequency and severity of natural disasters: Events caused by climate change lead to more claims, with over $1.8 billion claimed in the first half of this year alone due to extreme weather.
- Rising building and labor costs: The expense of materials and skilled labor required for rebuilding and repairs after disasters has significantly increased.
Insurers use sophisticated data modeling and risk assessment to determine premiums, reflecting the underlying risk of properties in flood-prone or bushfire-prone areas.
Mitigation and Affordability Concerns
The Resilient Building Council (RBC) offers a free service to homeowners to reduce natural disaster risks, potentially lowering insurance premiums. Actions recommended include strengthening structures for flood resilience, protecting windows and roofing for storms, and implementing ember screens or clearing flammable materials for bushfire protection. Some homeowners have reported premium reductions by demonstrating such resilience measures.
Actuaries Institute data indicates that 15 percent of Australian households cannot afford home insurance, a figure projected to grow without further action.
Despite these efforts, affordability remains a significant issue. Actuaries Institute data indicates that 15 percent of Australian households cannot afford home insurance, a figure that is projected to grow without further action.
Industry Response and Business Impact
Suncorp stated that premiums are influenced by increasing extreme weather events, rising construction costs, and persistent inflation. A report from IAG and a scientific research centre highlights escalating severe weather risks in south-east Queensland, New South Wales, and south-west Western Australia.
The Insurance Council of Australia (ICA) reported that extreme weather events have cost insurers a total of $25.3 billion since 2020, averaging $4.8 billion annually. This represents a 38 percent increase from the previous five years. The ICA is in discussions with the federal government regarding mitigation, adaptation, land use planning, and public-private partnerships.
Businesses are also experiencing impacts, with BizCover data showing a near doubling of severe weather event claims in the last three years. Power outages, fires, and storm damage are top threats, with claims averaging $39,000 and reaching up to $200,000.