In parts of Australia, home insurance is becoming increasingly expensive — and in some areas, unaffordable. This issue is no longer isolated. It is concentrated in flood‑, cyclone‑ and bushfire‑prone regions and is expected to worsen as climate risks intensify.

Estimates suggest around 15% of households are already under insurance affordability stress. In some high‑risk areas, premiums can reach tens of thousands of dollars per year, and flood cover take‑up is particularly low. For many homeowners, insurance isn’t optional — it’s a requirement of their mortgage.

What’s changed?

The biggest shift is how risk is priced. Insurance pricing is now far more precise, with risk assessed property by property rather than spread broadly across communities. At the same time:

• natural disasters are happening more often and causing greater damage, and
• building and repair costs have risen sharply.

The result is higher premiums, especially in high‑risk locations.

Looking ahead, forecasts suggest that one in four detached homes could be uninsured or underinsured by 2050, compared with around one in seven today.

Why this is a long‑term challenge

Better planning rules, stronger building standards and reduced taxes on premiums will help — but they don’t solve the hardest question: what do we do about homes already located in high‑risk areas where insurance is prohibitively expensive?

In some communities, mitigation and upgraded building standards can reduce risk enough to make rebuilding viable. In others, repeated exposure means relocation may be the only sustainable option.

These conversations are far easier before the next disaster, rather than in the aftermath when decisions are rushed and emotionally charged.

What this means for homeowners

This growing affordability challenge highlights the need for:

• clearer risk information at the point of buying a property,
• realistic expectations about rebuilding versus relocation, and
• insurance cover that reflects long‑term sustainability, not just like‑for‑like replacement.

In the highest‑risk areas, insurance design may need to evolve — focusing on maintaining some level of protection, even if full replacement cover is no longer realistic.

The key takeaway

Rising premiums are making climate risk visible. What’s needed now is a coordinated, long‑term response involving governments, insurers, lenders and communities — not short‑term fixes after each disaster.

At Action Insurance Brokers, we help clients understand their exposure, their options, and how their insurance responds in an increasingly high‑risk environment. If you’re concerned about affordability, coverage limits or long‑term insurability, we’re here to talk it through.

If you want, I can:

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