Insurance coverage is a measurable buffer against financial shock. A new index from Zurich Financial Services Australia has now quantified how large that buffer is – and identified where it is most absent.
The Australian Resilience Index, released on September 29, found that communities where at least half of residents hold some form of insurance are five times more likely to have high or very high financial resilience, and four times more likely to have high or very high health resilience, compared to communities below that threshold.
For brokers, that finding reframes underinsurance as a structural, community-level problem – not just an individual client gap.
Developed by Zurich alongside economics firm Mandala Partners, political consultancy the RedBridge Group, and polling firm Accent Research, the index draws on roughly two million data points assessed across close to 2,500 communities. It uses the Australian Bureau of Statistics’ Statistical Area 2 classification and measures resilience across four dimensions: financial, health, social, and environmental.
Financial wellbeing is the single strongest predictor of overall resilience – ahead of health, social, and environmental factors. Within that dimension, insurance coverage is a key input alongside income, superannuation balances, emergency savings, and reliance on government payments. The index draws on both Zurich’s proprietary insurance data and public datasets but does not disaggregate the coverage measure by insurance type.
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The index sits alongside a body of evidence on the scale of Australia’s insurance protection gap. A March 2025 survey by The Australia Institute of 2,009 Australians found that, among homeowners with a mortgage or who owned their homes outright, 15% said their house was underinsured and 4% said it was uninsured. The Australia Institute estimated that the combined 19% figure equated to about 1.4 million owner-occupied homes.
On the income protection side – a separate gap – the Council of Australian Life Insurers (CALI) has cited research estimating that 3.4 million Australians are underinsured to meet basic income protection needs.
The Australian Prudential Regulation Authority’s (APRA) March 2026 report, Mind the Gap: An Insurance Climate Vulnerability Assessment (CVA), provides a longer-term view. The regulator estimated that around one in seven Australian households in freestanding homes is currently uninsured. Under both of its modelled climate scenarios, that figure could rise to one in four by 2050 – roughly one million additional households without cover.
National Insurance Brokers Association (NIBA) CEO Richard Klipin said the APRA data reflected what brokers were already seeing on the ground. “APRA’s report underscores what brokers have been experiencing on the ground. Climate risk is already putting pressure on affordability, increasing underinsurance, and threatening the ability of too many Australians to protect their home,” Klipin said.
He added: “If we do not invest now in resilience, mitigation, and smarter long-term planning, we risk sleepwalking into a future where more households are left exposed and more communities become harder to insure.”
The underinsurance problem is not confined to households. The 2026 Vero SME Insurance Index, which surveyed 1,500 Australian businesses, found that 75% of small businesses take only an ad hoc approach to risk management. When premiums were relatively stable, 20% of businesses actively avoided increasing their sums insured – even when they knew replacement costs had risen.
Vero’s head of distribution, Anthony Pagano, said brokers remain the most direct line of defence against that inertia. “To guide them through uncertain times, we found over half of businesses received risk advice from their insurance broker, with the majority of businesses actioning this advice,” Pagano said.
The Zurich index maps geographic fault lines that broadly align with where underinsurance pressures are most acute.
Queensland records the highest share of residents with low or very low overall resilience at 23% – the worst of any state — and the weakest financial resilience nationally, with just 13% of residents in the high or very high band. The Northern Territory has the highest proportion of residents in the low or very low overall category at 37%, with 74% sitting in the lowest two categories for environmental resilience.
The ACT sits at the other end, with 41% of residents in the high or very high overall resilience band and just 1% in the lowest two categories.
At the community level, the Tiwi Islands in the Northern Territory scored lowest overall. Residents face crime rates five times the national average, no hospital access within 15 kilometres, and are more than 80 times more likely to live in crowded housing. Cottesloe in Western Australia ranked highest, with insurance penetration double the local average and superannuation balances seven times the national figure.
Females are more than three times more likely than males to have low or very low overall resilience – a finding with direct relevance for personal lines and life insurance brokers.
Around 32% of females fall into the lowest two financial resilience categories, compared to 6% of males. The index attributes this to higher rates of single-parenting, part-time employment, and lower accumulated wealth. Women are also four times more likely to be single parents, 30% more likely to feel uncomfortable expressing political views, and 27% more likely to report household crime victimisation.
Middle-aged males between 35 and 49 are the most resilient demographic, with 81% earning above the median income versus 60% of females in the same age group.
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Zurich CEO Justin Delaney framed the index as relevant across both commercial and policy conversations. “Insurance sits at the intersection of these four dimensions of resilience. It protects financial stability when shocks occur, supports health and wellbeing through prevention and recovery services, and relies on – and contributes to – social cohesion and environmental preparedness by pooling risks and supporting communities,” Delaney said.
Kos Samaras, director of strategy and analytics at the RedBridge Group, pointed to what the data captures beyond the financial dimension. “When savings, insurance and super are thin, every shock lands harder, whether it’s a rate rise, a health scare, losing a job, or a natural catastrophe. Those communities don’t just feel it in their bank balance, they demonstrate it in their trust in institutions and in how they vote,” Samaras said.
