The average cost of home insurance in Campbelltown City Council is $1,929. That’s a staggering 68% increase from five years ago. Factors like recent floods are pushing these rates up, which is concerning for homeowners.
Stephen Lau, a principal at Finity, pointed out that the 2022 floods in Australia were the second most costly disaster in the last 50 years. The floods caused severe property damage, often resulting in total losses quickly. Lau explained, “With floods, property can be severely affected before any preventive measures can be taken. In contrast, bushfires can be controlled with mitigation efforts.”
In Australia, regions with dense bushland, like Northern Beaches and Ku-ring-gai, are likely to see bushfire risks reflected in their premiums. Conversely, coastal areas face increased storm risks.
Reinsurance costs are another major factor for insurance companies. According to data from Swiss Re, the cost of reinsurance rose by 30% last year for the Australian market. These costs get passed on to homeowners through “risk-based pricing.” This means people living in high-risk areas could see even steeper premiums.
Despite being a well-insured country by global standards, Australia struggles with a growing number of underinsured or uninsured homes. Pearce noted that across the country, about 60% of homes are insured against floods. However, in high-risk flood zones, this figure drops dramatically to just 23%.
A recent survey from the Australia Institute found a mixed picture: 78% of homeowners reported having full insurance, while 15% are underinsured, and 4% have no coverage at all.
To combat rising premiums, experts suggest reducing risks. Lau advocates for a national risk assessment baseline to guide future home-building standards. Sharanjit Paddam, another principal at Finity, recommended reevaluating development in flood-prone areas, especially in places like Lismore and western Sydney.
CSIRO research supports these ideas, revealing that for every dollar spent on climate resilience, approximately $11 is saved on recovery costs. The Australian government is starting to take action with investments in climate risk assessments and adaptation plans.
It’s clear that rising insurance costs are not just a financial issue; they raise concerns about equity too. Michael Spencer from Monash University highlighted that increasing insurance premiums could force people into more vulnerable areas since these are often cheaper. This creates a cycle that places those already struggling at greater risk.
Keeping up with the changes in climate and their impact on insurance is essential for everyone. Understanding these factors can help homeowners make informed decisions about their coverage and property investments in the future.
Check out this related article: Study Reveals Strong Support for Climate Policies Among Americans as EPA Rolls Back Environmental Regulations
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