Report states Australia`s home insurance predicament worsens
Date
8/26/2024 7:11:46 AM
(MENAFN) Australia's home insurance affordability crisis has intensified, with a new report from the Actuaries Institute revealing that 1.6 million households are now grappling with insurance affordability issues, marking a 30% increase in 2023. This surge is largely attributed to rapidly rising insurance premiums that have outpaced wage growth.
The report, titled "Home Insurance Affordability and Home Loans at Risk," highlights that households experiencing affordability stress are now spending an average of 9.6 weeks of their gross income on home insurance. This figure is notably higher compared to the average expenditure of households across the nation.
The proportion of households where insurance premiums exceed one month’s gross annual income has increased to 15 percent in the year leading up to March 2024, up from 12% the previous year. The Finity actuaries behind the report identified a 9 percent rise in median insurance premiums as a key factor contributing to these affordability pressures.
Properties situated in high-risk areas for floods and cyclones have seen the most drastic increases in premiums, with some experiencing hikes of over 30 percent. Sharanjit Paddam, the report’s lead author, expressed alarm at the growing number of households struggling to keep up with insurance costs, which are rising faster than wages.
Despite the fact that 85 percent of households still find insurance affordable, the significant rise in those facing affordability challenges—up from 1.24 million last year—points to a worsening situation. The report underscores that the increasing risk of natural disasters, driven by climate change, is a major driver behind the rising insurance premiums.
Southeast Queensland, with its expanding population, faces the highest number of households struggling with insurance costs. Meanwhile, regions such as southwest Queensland, New South Wales’ Northern Rivers, regional Western Australia, and the Northern Territory are seeing the highest proportions of households affected due to their elevated flood and cyclone risks.
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