Insurance is turning into a second price tag on Australian housing. Even if you can afford the mortgage, you still have to clear the hurdle of insuring the place. In higher‑risk areas, that hurdle is getting taller every year.
Industry and government reports show premiums rising sharply in parts of Australia exposed to flood, fire and cyclone, with some households facing annual bills in the thousands for basic cover. In more extreme cases, insurers have simply withdrawn certain products or priced them at levels that function like a soft exit notice: you can stay, but you are effectively self‑insured against major damage. The underlying models are about risk and loss ratios, not politics; if expected claims outweigh premiums over time, companies move.[11][12]
Governments are not passive in this. State planning rules have allowed construction in known flood‑plains, fire zones and eroding coastlines for decades, often with short‑term economic benefits and long‑term exposure. When those same properties become hard or expensive to insure, owners understandably feel blindsided. Yet the risk did not appear out of nowhere. It was baked into approvals, infrastructure decisions and the choice to treat hazard maps as flexible guidance rather than hard boundaries.[11]
At the same time, climate policy language can blur into financial marketing. Reports that link “physical climate risk” to insurance pricing sometimes slide from straightforward risk assessment into broader narratives about a “climate crisis”, which can justify large capital shifts and new products. That does not mean the risks are fake; it does mean households deserve clarity about what is driving their premium: historical loss data, new hazard modelling, reinsurance markets, or policy‑driven assumptions about future scenarios.[12]
Blame is shared. Insurers protect their balance sheets; reinsurers price global risk; governments decide where building is allowed and what mitigation is funded; banks decide which properties they will write loans against. Ordinary owners sit in the middle. If premiums jump or cover is withdrawn, they can find themselves unable to sell at expected values, unable to move because the market discounts their home, and unable to absorb a major event without going under.[12][11]
The pattern is clear even without naming specific suburbs. There is a slow sorting process under way: safer, better‑serviced areas with manageable premiums on one side; pockets where insurance cost or availability quietly signals that some houses were always marginal bets. The policy question is whether to leave that sorting entirely to market forces, or to own up to past planning decisions and fund buy‑backs, mitigation or stricter rules so future buyers are not walking into the same trap.[11]
Sources (links)
https://new.gbca.org.au/news/gbca-news/a-wicked-problem-a-critical-moment/[11]
https://www.abc.net.au/news/2023-08-18/australia-investing-less-foreign-aid-system-overhaul/102683746[12]