Australia's Home Insurance Affordability Crisis Deepens as Premiums Climb 51% in Five Years

Australia's home insurance market is showing signs of structural crisis, according to fresh data from the Australian Prudential Regulation Authority (APRA) and industry analysis, as a rapidly changing climate-risk profile collides with the limits of household affordability. APRA's quarterly general insurance statistics, drawn from the period through March 2026, paint a picture of a line under sustained pressure: the householders insurance segment generated about $4.25 billion in quarterly gross written premium yet still produced an underwriting loss, an outcome that signals the line is not in good health despite years of premium increases.

The affordability strain is stark. Australian home insurance premiums have risen by an annual average of around 7.2% between 2010 and 2025, climbing 51% over the most recent five-year period, far outpacing income growth for many households. Gallagher Bassett's 2026 Claims Insights report found that premium affordability and insurability rank as the leading business challenge for Australian insurers, a finding the APRA data validates. A YouGov survey commissioned by the Climate Council found that 54% of insured respondents were concerned that bushfires, floods, and severe storms could make home insurance unaffordable or unavailable in their area.

The equity dimension is especially acute. The Insurance Council of Australia has highlighted a clear correlation between high flood risk and socioeconomic status, noting that around 70% of households exposed to the highest flood risk are in areas where median income is below the national median, and 35% are in areas below the poverty line. APRA's broader stress testing, set out in its 'Mind the Gap' Insurance Climate Vulnerability Assessment, estimates that around one in seven Australian houses are effectively uninsured today, and warns that climate-driven pressure on premiums could significantly widen the protection gap out to 2050 under plausible warming scenarios. Between 2015 and 2024, about 33% of economic losses from natural catastrophes in Australia were uninsured, compared with 57% globally.

The regulator, the Insurance Council, and broker bodies have converged on resilience and mitigation as the path forward, urging investment in flood levees, fire breaks, and stormwater infrastructure, along with planning reforms to steer development away from high-risk locations. Industry groups have also flagged that state and federal taxes and charges, including stamp duties and emergency-services levies, can add substantially to the cost of cover and contribute to underinsurance.