Almost half (49%) of Australians believe that their insurance premiums have been skyrocketing due to the impacts of climate change, according to Mozo's latest research.
The report showed that 67% of landlords, 61% of renters, and 57% of drivers reported insurance premium increases on their policies in the past 12 months – with floods, storms, and bushfires driving claims across home and car insurance policies, at around $4.8 billion. The results corresponded with recent NRMA research, which revealed that 77% of Australians are concerned about the severity and frequency of natural disasters in the country.
Focusing on home insurance, Mozo's research found that two-thirds (62%) of home insurance customers surveyed saw their premiums rise in the past 12 months. Of those surveyed, 17% said their premium had significantly increased.
“Insurance is increasingly out of reach for many Australians, as premiums rise on the back of floods, fires, and wild weather, with the situation set to worsen as climate change takes its toll across the country,” said Mozo money expert Tom Godfrey.
“As the premium hikes and severe weather events continue to erode the value of insurance for many Australians, many homeowners are increasingly financially vulnerable,” he continued. “With cheaper housing often built in disaster-prone areas such as on flood plains and in bushfire zones, it's people who need the most financial protection who can least afford it.”
Almost a third (32%) of the participants had to claim on their home insurance in the past year, with 37% claiming for flood damage, 37% for storm damage, 21% for theft, and 19% for bushfire damage.
Focusing on car insurance, Mozo noted the Insurance Council of Australia's (ICA) study that found car insurance premiums in 2022 had shot up by 21% year-on-year from 2021 as Australians return the roads post-COVID-19-related restrictions. Additionally, the frequency of claims had also bounced back from lockdown lows by 5.6% from 2021.
The report further revealed that 22% of the respondents made a car insurance claim in the past year, of which over half (54%) claimed for a minor accident and 27% for a major accident. Other claims were related to hail damage (21%), theft (18%), bushfires (16%), and flooding (13%).
When asked how they reduce the cost of their car insurance, 21% of the respondents said they plan to increase their excess to lower their premium in the next 12 months, 19% will reduce the kilometres they drive, 16% will decrease the sum they are insured for, and 7% will cancel their insurance policy.
“With Mozo's analysis finding the cost of cover often driven by where you live, how far you drive, your gender, age, and car colour, taking the time to compare car insurance policies can be a simple and effective way to drive home a more competitive deal,” Godfrey said.
Regarding the impacts of climate change on insurance, Godfrey said: “It seems clear that the increased frequency of extreme weather events will put significant stress on the insurance providers, and their customers are likely to feel the effects in the form of significantly higher premiums or, in extreme cases, the inability to access insurance.”
As Australia remains vulnerable to the impacts of climate change, the insurance industry has been warning governments and Australians that some areas in the country might be uninsurable in the future. Meanwhile, some insurers have started battling against climate change, with insurers implementing sustainable initiatives and major insurers committing to net-zero.