Cost of wild weather: home insurance affordability stress up 30%
Affordability stress increased by nearly a third (30%) to 1.6 million in the past year, according to the Home Insurance Affordability and Home Loans at Risk report.
Affordability stress is when home insurance costs a household more than one month of its gross annual income.
Amid the increasing affordability stress, median insurance premiums continued to soar – up 9% year on year, the Actuaries Institute report shows.
The report’s lead author, Sharanjit Paddam says the increasing numbers of households were struggling because premiums were outpacing wages growth.
“Unfortunately, we expect this will continue because of the overall increasing risk of natural disasters associated with climate change, which will continue to put upward pressure on premiums,” Paddam said.
The report flagged the potential flow on effects to Australia’s $2.3 trillion home loan market.
An estimated 5% of Australian households (180,000) with a mortgage face home insurance affordability stress.
Home insurance claims are rising too
The rising cost of premiums for consumers coincides with the number of claims increasing, which are clearly costing insurers a lot of money.
The Insurance Council of Australia (ICA)’s recent Catastrophe Resilience Report found the number of claims went up by 73% in 2023-24, to more than 156,000, compared to the period prior.
Floods were the leading contributor – the ICA says insurers incurred $2.19 billion in claims from extreme weather disasters in 2023-24.
Across Australia an estimated 1.2 million properties face some level of flood risk.
What action can I take with my home and insurance?
Home insurance is now a massive expense for Australians across the land.
Here are some ways you may be able to lower the cost of your home insurance:
- Look for policy discounts
- Secure your home
- Opt for a higher policy excess
- Shop around for a better deal.
If you’re ready to compare insurance policies, take a look at some great options for home and contents insurance below.
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