Extreme weather findings ‘further proof’ government action is needed

Extreme weather findings ‘further proof’ government action is needed – ICA | Insurance Business Australia

Catastrophe & Flood

Extreme weather findings ‘further proof’ government action is needed – ICA

Actuaries Institute explored home insurance affordability in the context of natural perils

Catastrophe & Flood

By
Roxanne Libatique

The Insurance Council of Australia (ICA) has welcomed two reports by the Actuaries Institute and echoed its calls for greater government investment into extreme weather resilience.

Recent reports commissioned by the Actuaries Institute explored home insurance affordability in the context of natural perils and examined flood risk.

The ICA said the reports emphasised the urgency of addressing home insurance affordability through government investment into extreme weather resilience, in addition to policy intervention.

“These two reports from the Actuaries Institute are further proof of the urgency of reducing risk for communities exposed to extreme weather through greater government investment and action,” said ICA CEO Andrew Hall. “Insurers understand that people are hurting right now as cost of living pressures weigh heavy on monthly budgets, which is why addressing insurance affordability is a critical issue for our industry,”

“State governments, in particular, can provide immediate relief on insurance costs by reforming their insurance taxes. With responsibility for land use planning, state governments must also urgently change our approach to what we build and where we build it so future homeowners are not left stranded without insurance cover.”

In the year to March 2023, median home insurance premiums jumped by 28% to $1,894, with the highest risk properties up by a whopping 50%. The number of “affordability stressed” Australian households rose from 10% to 12%, which means they spend on average 8.8 weeks of their income on home insurance, more than seven times what the average household spends.

The research recommended short, medium, and long-term policy measures to reduce affordability stress for Australian households facing the highest extreme weather risks.