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Rising Insurance Premiums Intensify Australia's Cost-of-Living Crisis

Rising Insurance Premiums Intensify Australia's Cost-of-Living Crisis

Rising Insurance Premiums Intensify Australia's Cost-of-Living Crisis?w=400
Insurance expenses across Australia have surged by $30 billion over the past decade, as highlighted by the Climate Council, with premiums escalating more than double the inflation rate during this period.
This escalation comes alongside insurance companies reporting annual losses averaging $4.5 billion over the last five years due to weather-related calamities, marking a 67% increase from past years, primarily driven by flood-related claims.

According to the Insurance Council of Australia, 225,000 homes face a 2% to 5% annual flood risk, yet only 23% of these are protected by flood insurance, a stark contrast to the national average of 60%. The Actuaries Institute reveals that 12% of households are experiencing insurance affordability stress, meaning their home insurance premiums exceed four weeks' worth of income.

Supporting these findings, research from The Australia Institute indicates that 1 in 5 households are either uninsured or underinsured, with 4% lacking insurance entirely and 15% carrying insufficient coverage. This leaves many families significantly exposed, with predictions suggesting uninsured households could forfeit three-quarters of their wealth if disaster strikes.

Despite the sharp increase in premiums, Australian insurers have struggled with underwriting losses in the home insurance sector. This rise in insurance costs has been a significant factor in the ongoing cost-of-living crisis, fuelling upward pressure on the Consumer Price Index (CPI) inflation.

These findings underscore the pressing challenges in mitigating affordability issues while ensuring adequate insurance coverage amid increasingly prevalent extreme weather events. Policymakers and industry stakeholders must work collaboratively to address these concerns, balancing consumer protection with financial sustainability in the insurance sector.

Published:Tuesday, 29th Apr 2025
Source: Paige Estritori

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