The Times Australia
The Times World News

.

Home insurance bills are soaring as climate risks grow. The government should step in

  • Written by Paula Jarzabkowski, Professor in Strategic Management, The University of Queensland
Home insurance bills are soaring as climate risks grow. The government should step in

The Actuaries Institute of Austalia[1] has just confirmed what many Australian households already know – home insurance is increasingly unaffordable.

It found average premiums climbed 28% in the year to March, while premiums for higher-risk properties, such as those in flood-prone areas, climbed 50%.

The institute also found 12% of Australian households – 1.24 million – are experiencing extreme home insurance affordability stress, defined as paying more than four weeks of gross household income on premiums.

Twelve months ago, this figure was 10%, or 1 million households.

Actuaries Institute of Australia[2] While in the past affordability had been recognised as a problem affecting vulnerable Australians, it has got to the point where it is hitting households across the socio-economic spectrum. And not only in Australia. Insurers are increasing premiums in locations at high risk of climate-related damage throughout the world and even withdrawing home insurance completely in places such as California and Florida. The high premiums are spreading to households in lower-risk locations through a complex interconnected system of rising private reinsurance[3] charges (insurance for insurers), more frequent and worse weather events, and increasing rebuilding costs. The case for a government-owned reinsurance pool The Actuaries Institute put forward risk pooling[4] as an emergency solution. It would work through a government-owned and run “reinsurance pool”, providing nationwide coverage for claims relating to extreme weather events. Private insurers would pass on their risk to the state-owned pool, which would use the pooled premiums to ensure every insurer was covered. In the past, the insurance industry has been overwhelmingly opposed to the idea, viewing it as interfering in a traditionally private market. As recently as March 2022, as Queensland and NSW reeled in the aftermath of catastrophic flooding and its implications for insurance[5], the Insurance Council of Australia responded to calls to extend the newly created cyclone reinsurance pool[6] by saying the private sector did things better[7]. The industry’s concerns are not totally unfounded. Setting up a risk pool without taking steps to mitigate the underlying risk would simply mask, or even exacerbate, the problem. It could facilitate insurance and rebuilding in high-risk areas that will suffer repeated losses. Risk pools have to include mechanisms that tie insurability to long-term risk reduction through mitigation, updated planning and building regulations, and disaster-resilient rebuilding programs, informed by nationwide data collection. Read more: Victims of NSW and Queensland floods have lodged 60,000 claims, but too many are underinsured. Here's a better way[8] Governments are stepping in elsewhere Extreme weather risk pools work in advanced economies around the world. Some, such as the United States’ National Flood Insurance Program[9], mask risk while allowing rebuilding in disaster-prone areas. But others, such as those in Spain[10], France[11] and Switzerland[12], integrate risk pooling with risk reduction. Australia would need to draw on the experience of the countries that do it well, doing everything we can to reduce underlying risk, including by changing where and how we build, and relocating people from disaster-prone areas. Read more: After the floods comes underinsurance: we need a better plan[13] If we don’t do something along the lines of government-provided and mandated reinsurance, insurance and its enormous benefits will no longer be available to an increasing share of Australians, regardless of their financial means. The inclusion[14] of the idea in the Actuaries Institute report might be an indication that opposition is softening. The future of home insurance could depend on it. References^ Actuaries Institute of Austalia (www.actuaries.asn.au)^ Actuaries Institute of Australia (www.actuaries.asn.au)^ reinsurance (www.ft.com)^ risk pooling (www.actuaries.asn.au)^ implications for insurance (www.afr.com)^ cyclone reinsurance pool (treasury.gov.au)^ did things better (www.insurancenews.com.au)^ Victims of NSW and Queensland floods have lodged 60,000 claims, but too many are underinsured. Here's a better way (theconversation.com)^ National Flood Insurance Program (cup.columbia.edu)^ Spain (fdslive.oup.com)^ France (www.ccr.fr)^ Switzerland (www.vkg.ch)^ After the floods comes underinsurance: we need a better plan (theconversation.com)^ inclusion (www.actuaries.asn.au)

Read more https://theconversation.com/home-insurance-bills-are-soaring-as-climate-risks-grow-the-government-should-step-in-211515

Times Magazine

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Times Features

Exploring the Curriculum at a Modern Junior School in Melbourne

Key Highlights The curriculum at junior schools emphasises whole-person development, catering to children’s physical, emotional, and intellectual needs. It ensures early year...

Distressed by all the bad news? Here’s how to stay informed but still look after yourself

If you’re feeling like the news is particularly bad at the moment, you’re not alone. But many of us can’t look away – and don’t want to. Engaging with news can help us make ...

The Role of Your GP in Creating a Chronic Disease Management Plan That Works

Living with a long-term condition, whether that is diabetes, asthma, arthritis or heart disease, means making hundreds of small decisions every day. You plan your diet against m...

Troubleshooting Flickering Lights: A Comprehensive Guide for Homeowners

Image by rawpixel.com on Freepik Effectively addressing flickering lights in your home is more than just a matter of convenience; it's a pivotal aspect of both home safety and en...

My shins hurt after running. Could it be shin splints?

If you’ve started running for the first time, started again after a break, or your workout is more intense, you might have felt it. A dull, nagging ache down your shins after...

Metal Roof Replacement Cost Per Square Metre in 2025: A Comprehensive Guide for Australian Homeowners

In recent years, the trend of installing metal roofs has surged across Australia. With their reputation for being both robust and visually appealing, it's easy to understand thei...