Insurance firms, banks, and consumer advocates are proposing a national plan to offer cheaper home insurance premiums and finance options to Australians who upgrade their properties to better withstand natural disasters. Home insurance affordability stress has risen in recent years, with the Actuaries Institute estimating that the share of households spending the equivalent of at least four weeks of gross income on cover climbed from around 10% in 2022 to about 15% in 2024, or roughly 1.6 million homes. Over the past five years, Finity estimates that average home premiums have increased by about 50% across Australia.
A cross‑sector group has released the Housing Resilience Action Plan 2030, proposing a National Risk and Resilience Rating System (NRRRS) that would formally connect property‑level risk mitigation measures to both insurance premiums and mortgage pricing. “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. 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,” said Finity principal Sharanjit Paddam, who led the work on the plan, as reported by ABC.
The plan proposes a nationally consistent way to rate resilience upgrades such as raising floor levels, adding drainage, or strengthening roofs, so they can be recognised in underwriting and loan decisions. “[Insurance] allows you to recover afterwards, but you’re still getting damaged by the flood or the bushfire. Resilience building actually helps protect your home so you don’t suffer from the financial consequences … the mental consequences and the social costs,” Paddam said.
The Housing Resilience Action Plan was released soon after the Australian Prudential Regulatory Authority (APRA) published its Mind the Gap: Insurance Climate Vulnerability Assessment, a climate stress test focused on home insurance affordability and coverage. Working with five major general insurers, APRA modelled how the “home insurance protection gap” – the share of freestanding homes likely to be uninsured because premiums are unaffordable – could evolve to 2050 under two climate scenarios. APRA has stated that the scenarios are not forecasts, but the stress test suggests that around one in seven households may be uninsured today, potentially rising to about one in four by mid‑century if underlying risks and economic pressures are not addressed.
Under a higher physical‑risk pathway, expected annual weather‑related losses across Australian homes increase from under $7 billion in 2024 to more than $16 billion by 2050, driven by storms, hail, floods, bushfires, and cyclones. In a delayed‑transition pathway, inflation in construction costs and weaker income growth are the main drivers of worsening affordability, even where hazard exposure changes more slowly. The analysis indicates that regional and rural communities are likely to bear a larger share of the protection gap, particularly in New South Wales and Queensland. APRA has warned that more uninsured homes could translate into higher credit risk for banks, greater uninsured losses for households, and increased pressure on governments to provide post‑disaster support.
Legal assistance and community organisations report that some households are already choosing not to insure, especially in higher‑risk regional areas. ARC Justice chief executive Damian Stock said that in parts of regional Victoria, about half the homeowners his organisation speaks with are now without home insurance. “What we’re seeing increasingly is that people don’t really have a practical choice anymore. What we’re concerned about is ultimately the viability of some of these smaller regional towns, or increased levels of disadvantage by people who move in for properties that are worth less. This is not a future issue. This is happening right now … it’s really shaping how people rebuild and whether they can stay in their towns,” Stock said, as reported by ABC.
Alongside affordability, consumer advocates are highlighting gaps in pricing transparency and guidance on risk reduction. Financial Rights Legal Centre senior policy and communications officer Julia Davis said the centre receives thousands of calls each year from insurance customers trying to understand premium changes and options. “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. Right now, pricing is just so opaque. There are no rules around making it more transparent, and we get a lot of calls from people who not only have gotten their premium and it’s much higher and they’re frustrated, but they’ve called the insurer and can’t get information,” Davis said, as reported by ABC. The Housing Resilience Action Plan includes proposals for free assessments and clearer communication to help households understand both their risk profile and the effect of mitigation measures.
Insurers and banks involved in the Housing Resilience Action Plan argue that a shared framework for assessing and pricing resilience upgrades is needed to align incentives across the system. “We have to have a language that banks and insurers can actually help their customers understand in a very granular way, so that every stakeholder is on the same page supporting the homeowner. [For example], if I raise my house or I add extra drains, then my flood risk changes,” said Community First Mutual Bank non‑executive director Jacki Johnson, as reported by ABC.
The plan calls on the federal government to convene a National Housing Resilience Accord within six months to begin implementing recommendations, including the proposed NRRRS. These developments are likely to mean greater emphasis on risk‑based pricing, verification of property‑level mitigation, and engagement with government on both physical resilience and affordability settings as climate‑related pressures continue to build.
