Australia's insurance industry has thrown its weight behind a coordinated national plan that would reward homeowners with cheaper premiums and lending costs in exchange for upgrading their properties to withstand natural disasters.
IAG, the Insurance Council of Australia (ICA) and a coalition of banks, actuaries, consumer advocates and academics are jointly backing the Housing Resilience Action Plan 2030, which proposes a National Risk and Resilience Rating System (NRRRS) to directly connect resilience upgrades to lower insurance and finance costs. The plan, released this week, was authored by stakeholders including Monash University, Finity, the Financial Rights Legal Centre and the Resilient Building Council.
Julie Batch (pictured right), CEO of Retail Insurance Australia at IAG, told ABC News that insurers welcomed the plan's focus on "practical, coordinated solutions".
"Resilience is inherent to insurance, and for insurers to continue acting as an effective economic shock absorber when disasters strike, we must reduce the growing risks embedded in our existing housing stock," Batch said in a statement to the ABC. "Doing so is critical to improving long-term insurance affordability."
The ICA echoed that view in its own statement to ABC News, framing risk reduction as the central lever for tackling affordability.
"Reducing risk for the households most exposed to extreme weather is a clear priority for the ICA and our members, and it is the most effective lever we have to address affordability over the long-term," an ICA spokesperson said.
"As an industry that prices risk, we know the only sustainable way to ease pressure on premiums is to reduce the underlying risks themselves. Without coordinated action across government, industry and communities, affordability pressures will keep growing."
The plan comes as home insurance affordability deteriorates sharply. According to the Actuaries Institute, the number of households experiencing insurance affordability stress — where premiums exceed four weeks of gross household income annually — has risen 50 per cent in two years, climbing from 10 per cent of homes in 2022 to 15 per cent, or 1.6 million homes, in 2024.
Finity, which spearheaded the report, told the ABC that the average cost of home insurance had risen by about 50 per cent across Australia over the past five years, with further pain ahead. Economic losses from natural disasters are projected to nearly triple from $11.8 billion in 2023–24 to $40.3 billion by 2049–50, while APRA estimates uninsured households could rise from one in seven today to one in four by 2050.
"It very much is a systems issue. It can't be solved by insurers on their own, or banks on their own, or even government on its own," said Sharanjit Paddam (pictured left), principal at Finity. "We have houses in Australia that were not built for today's climate and certainly not built for the future climate, and the consequence of that is unaffordable insurance."
Consumer advocates told the ABC that opaque pricing remains a major frustration for policyholders.
Julia Davis, senior policy and communications officer at the Financial Rights Legal Centre, said her organisation receives thousands of calls every year from insurance consumers struggling to understand premium increases.
"People's premiums go up and there is just no information in their renewal notice about why. Nothing tailored to their individual risk, and no information about what they could do to make their homes safer," Davis said. The action plan includes measures to give households free assessments and clearer information on what drives their pricing.
The affordability squeeze is hitting regional Australia hardest. Damian Stock, chief executive of Victorian regional organisation ARC Justice, told ABC News about half of the homeowners he was speaking to in regional Victoria were going without insurance.
"What we're seeing increasingly is that people don't really have a practical choice anymore," Stock said, warning of flow-on effects for the viability of smaller regional towns.
The plan calls on the federal government to convene a National Housing Resilience Accord within six months. Community First Mutual Bank non-executive director Jacki Johnson likened the opportunity to the success of green loans for solar and EVs, arguing that consistent language across banks and insurers is critical.
The Resilient Building Council, led by chief executive Kate Cotter, has already begun rolling out resilience programs and is urging Canberra to scale them nationally.
