Australia’s insurers have formally called on the federal government’s climate advisory body to treat disaster risk reduction as a co-equal policy priority – backed by regulator data showing the cost of inaction is already reshaping the market The Insurance Council of Australia (ICA) lodged a submission on August 7 with the Climate Change Authority (CCA) in response to its 2026 Annual Progress Advice Consultation Paper, arguing that Australia’s climate policy framework cannot achieve its objectives by focusing on emissions reduction alone. The submission calls on the CCA to expand its reference pathway framework to formally assess progress on adaptation and risk reduction alongside emissions metrics – and sets out a specific investment agenda it says is needed to prevent structural deterioration in insurance affordability and availability. For brokers, the submission is more than a policy document. The conditions it describes – rising extreme weather costs, a widening protection gap, constrained availability in high-risk markets, and inadequate hazard data – are the same conditions shaping what can be placed, at what price, and for whom.
The ICA’s submission states that the total insured cost of extreme weather events currently averages $4.5 billion annually and is projected to reach at least $35 billion annually by 2050. That trajectory has now been corroborated by the Australian Prudential Regulation Authority’s (APRA) March 2026 Insurance Climate Vulnerability Assessment (Insurance CVA), which found that expected national weather losses are projected to increase from less than $7 billion annually in 2024 to over $16 billion annually by 2050 under the higher physical risk scenario.
The same APRA assessment found that approximately one in seven Australian homes is currently uninsured and modelled that rising to one in four by 2050 – an additional one million properties. In rural areas, the protection gap could exceed 40% under both modelled scenarios by 2050, with New South Wales and Queensland accounting for approximately 60% of all uninsured households nationally, both today and in 2050. Between 2010 and 2025, Australian home insurance premiums rose by an annual average rate of 7.2%, while wages grew at 3.1% annually, according to APRA – a differential that erodes affordability at each renewal cycle and pushes some policyholders toward reducing cover or dropping it entirely.
The submission’s adaptation agenda is specific. The ICA has called for $30.15 billion in investment over 10 years to deliver large-scale flood mitigation infrastructure, including the establishment of a national Flood Defence Fund. It has also called for household adaptation programs to strengthen properties against floods, bushfires, and cyclones; reforms to land-use planning frameworks to prevent new development in high-risk areas; updates to the National Construction Code; and a coordinated federal-state buyback program for properties facing unacceptable flood risk that cannot be mitigated by other means.
The submission cites two examples to ground the economic case. Levee construction in Roma, Queensland, reduced insurance premiums by up to 60% for many properties and as much as 90% for some households. A $58 million levee investment in Launceston, Tasmania, is estimated to avoid approximately $216 million in future recovery costs. The ICA’s own Insurance Catastrophe Resilience Report 2024-25 cited modelling showing that every dollar invested in mitigation generates around $9 to $10 in avoided disaster recovery costs over the long term.
These are not abstract policy numbers. Where governments invest in mitigation, premiums in affected areas fall. The Roma and Launceston examples demonstrate that directly. Where investment does not occur, the upward pressure on premiums in high-risk areas continues. The Australian Competition and Consumer Commission’s (ACCC) June 2026 final insurance monitoring report confirmed that no new insurers have entered northern Australian markets since the cyclone reinsurance pool was established in 2022, despite the pool’s stated objective of improving market competition.
A second priority in the submission with direct commercial relevance for brokers is the ICA’s call for a nationally consistent climate hazard information baseline. The submission argues that inconsistent Commonwealth, state, and territory datasets currently undermine risk assessment, land-use planning, and investment decisions – and that consolidating them into a publicly accessible national resource would improve the accuracy of risk information across the market.
APRA’s Insurance CVA noted that the protection gap tends to widen more in regions that already have lower levels of home insurance protection today, and that these higher protection gap areas are more likely to be in regional or rural Australia, as they tend to experience greater exposure to weather perils and lower average incomes. Consistent hazard data would help governments identify and limit development in precisely these locations – reducing the volume of hard-to-place risks entering the market over time.
The submission addresses economy-wide emissions reduction, though it is frank about the limits of what insurers can directly influence. The ICA notes that its members cover over 12 million homes and over 18 million cars, per its 2025 Australia's Insurance Industry Snapshot, with the emissions profiles of those assets largely determined by grid electricity intensity, appliance choices, and fossil fuel consumption. The ICA supports policies that accelerate economy-wide electrification, consistent with its Climate Change Roadmap, on the basis that as the grid decarbonises, the emissions profile of insured assets will decline as a consequence.
The ICA’s submission recommends that the CCA take an active role in reporting on the government’s progress on adaptation outcomes, in consultation with the National Emergency Management Agency (NEMA), the Department of Climate Change, Energy, the Environment and Water (DCCEEW), and the Australian Climate Service (ACS). Premium affordability and insurability rose from the sixth most commonly reported business challenge for Australian insurers in 2025 to the first in 2026, according to Gallagher Bassett’s 2026 insurer survey, with respondents citing inflation, growing climate catastrophes, and regulatory pressures as coinciding factors. The ICA’s submission is one of several concurrent channels through which the industry is pressing government to treat adaptation investment, hazard data, and planning reform as climate policy priorities. The policy decisions that follow – on the Flood Defence Fund, the National Construction Code, and land-use planning – will directly shape the placement environment brokers are navigating into the 2030s.
