Climate change means one in 25 homes could become uninsurable by 2030, report warns

About one in 25 Australian homes is at risk of becoming effectively uninsurable by 2030, according to a new Climate Council report based on analysis by a climate risk assessment group.

That number rises to more than one in 10 households for some of the worst affected areas, including parts of Brisbane, the Gold Coast, Greater Shepparton, Ballina and Port Adelaide.

The report’s authors warn that Australia is heading for an “insurability crisis” as climate change increases the risk of worse extreme weather conditions, causing insurance premiums to “skyrocket”.

“We’re talking about half a million properties, that’s not negligible,” said Nicki Hutley, co-author of the report and an economist at the Climate Council.

Of the top 10 affected voters, most (80%) are due to growing insurance risk posed by river flooding, according to the ‘Uninsurable Nation’ report, released today.

Bushfires and surface water flooding, or surface flooding not associated with swelling rivers, also feature prominently in driving up insurance premiums in coming years.

When a property becomes “effectively uninsurable,” it means insurance premiums are so high they are unaffordable for the average homeowner, according to Karl Mallon of Climate Valuation, who provided the data to the Climate Council.

Once there is a greater than 1% chance in any given year of a property suffering major damage from an extreme weather event, that’s when the bounties kick in to increase, said Dr. Mallon.

“Once you go over that threshold, the costs usually start to rise. So instead of paying $1,000 a year, you get $3,000 a year and it goes up – we’ve seen bonuses of $30,000 a year “, did he declare.

“Essentially, we remain of the view that once you get past those levels, many people won’t be able to afford that insurance.”

The breakdown of uninsurable housing by state by 2030, as projected by the Climate Council and Climate Valuation.(Provided: Climate Council)

Queensland is expected to be the hardest hit state, with up to 193,000 properties (6.5% of the total number) considered to be at high risk of being uninsurable by 2030, followed by New South Wales with over 148,000 properties.

Conclusions were based on high emissions and business-as-usual prospects for climate change. Dr Mallon said what banks and insurance companies choose to base their premiums on varies, but they are required to consider status quo forecasts.

“The kind of guidance coming from regulators in place in Australia and around the world, they almost all insist that every company has an opinion on high emissions scenarios,” he said.

“Unfortunately, that’s where we follow, that’s along those pathways.”

Leave a Comment