Home insurance affordability and home loans at risk

Australia is facing a growing crisis in home insurance affordability, driven by rising premiums and increasing climate-related natural disasters.

A new report by the Actuaries Institute, Home Insurance Affordability and Home Loans at Risk, reveals that 1.6 million households are now experiencing home insurance affordability stress — up by 30% from the previous year.

These households spend an average of 9.6 weeks of their gross income on home insurance, a figure that is seven times higher than the average household.

The report notes that overall, 15% of households are now "affordability stressed," compared to 12% in the previous year, with the sharpest increases seen in areas at high risk of floods and cyclones.

The report highlights the potential consequences for Australia's $2.3 trillion home loan market, as 5% of households with a mortgage face insurance affordability stress, with premiums more than double the national average.

The Actuaries Institute warns that without action, the rising risk of natural disasters will continue to put pressure on premiums, posing challenges for homeowners, lenders, and governments alike.

The report calls for collaboration on sustainable finance measures, such as resilience loans and bonds, to address these issues and ensure a path forward for those most affected.

Download the Actuaries Institute's report