Rising insurance costs are putting millions of people at risk of going without cover – realestate.com.au

One in five Australians are considering canceling their home insurance in response to rising costs, raising costs for the rest of the country – and causing more deaths from natural disasters.

YouGov’s poll for the Climate Council also found that 54 percent of the nation now fears that worsening weather conditions and natural disasters would make home and contents insurance unaffordable or unavailable in their area.

About 46 percent believe that extreme weather has already caused an increase in insurance costs.

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Responses from more than 1,500 Australians surveyed also showed that one in seven paid home insurance premiums amounting to more than a month’s worth of their average household income.

It follows Insurance Council of Australia data released last month showing that extreme weather events cost almost $3.5 billion in insured losses from 264,000 claims in 2025.

Climate councilor and economist Nicki Hutley said the big concern is the 22 percent of people who are considering giving up insurance.

Contrary to the Australian Prudential Regulation Authority’s insurance policy number data, this would equate to almost 3 million households.

Homes in flood-prone areas often have the highest insurance costs, or may receive no coverage at all. Photo: Brendan Radke.

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Ms Hutley said many were likely to be in areas of lower socio-economic prosperity with a high risk of flooding and other disasters, and that the country was on track to “see a lot more people” and would consider giving up insurance.

The economist said the poll was a “blunt reminder that climate pollution is already costing us a lot of money” and that governments at all levels needed to take more action to build resilience in at-risk areas across the country.

“There will be some areas where the government can make it economic to support communities to make them more insurable,” Ms Hutley said.

“We can reduce the risk and that reduces the risk of higher insurance costs.”

She said a fractured coalition gave the federal government a perfect opportunity to tackle new problems that would make a difference by funding levees around at-risk communities and other climate-induced disaster prevention measures.

Economist and climate councilor Nicki Hutley says government intervention is needed by 2026 to prevent the pain on insurance bills from worsening and putting more homeowners at risk.

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She said this could have a lasting impact on the insurance costs of struggling households, and would be better than one-off support payments for things like energy bills.

“If you can’t do it now, you’ll never be able to do it again,” she said.

She pointed to the Victorian government having introduced extensive rental reforms in recent years, despite being unpopular with property investors.

“The market is moving, but it is happening at an incredibly incremental pace. We need more action from governments to really tackle this,” Ms Hutley said.

“We can’t still be doing this in 12 months.”

There are also fears about what a reduction in insurance levels could mean for health and safety, with Emergency Leaders for Climate Action founder and former NSW Fire Chief Greg Mullins revealing he heard suggestions that people without cover would be more likely to stay put and fight fires in their homes.

Respected firefighter Greg Mullins fears what an increase in uninsured homes could mean for the decisions owners make during fire events. Photo: Richard Dobson.

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“Anecdotally, I know and have heard from many people who have stated that they ‘will keep fighting because if we lose we will have nothing left,’” Mr Mullins said.

“From my perspective, that’s really concerning as the fires continue to become more intense and destructive.”

Insurance Council of Australia CEO Andrew Hall said Australians have long proven they see the value in insurance and data from the Australian Prudential Regulation Authority shows policy numbers are rising.

“But costs have gone up a lot in recent years due to inflation,” Hall said.

He noted that maintaining insurance was a requirement for most mortgages, but especially in areas with high flood risk, there were increasing problems with insurance costs that they raised with governments at the federal, state and local levels.

Andrew Hall, CEO of the Insurance Council of Australia, believes a government overhaul of insurance taxes could have the quickest impact on premium costs.

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Using the US’s $1 billion Disaster Ready Fund to install levies and similar infrastructure could be one way to enable better insurance outcomes, with Mr Hall arguing that risk reduction was the best way to reduce premiums overall.

“If we don’t do something about it, it will continue to grow and become more expensive to fix,” he said.

Mr Hall added that governments were also driving up insurance costs by continuing to charge stamp duty every time a household renewed their policy, as well as GST, which resulted in taxes accounting for 20 per cent of insurance costs in most parts of the country – and more than 30 per cent in NSW, where there is a further emergency services levy.

“If you wanted to create immediate relief, you would reform it,” Hall said.

He also acknowledged that the sector was reliant on an increasing number of policies to mitigate further cost increases for existing policyholders.

A combination of fires in Victoria and storms in NSW and Queensland in recent months could impact home insurance bills in the near future.

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“The premiums of many pay the claims of a few,” Hall said.

The YouGov poll covered 1508 Australian voters in January, including 1081 with active home and contents insurance.

It reached representative levels across genders, ages, regions, incomes and education.

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