Australia's Home Insurance Squeeze: Premiums Up 51% in Five Years and a Line That Still Struggles to Make an Underwriting Profit

Australian home insurance is caught between two pressures: premiums that households find increasingly hard to afford, and results that remain volatile for insurers even after years of increases. The picture comes from the Australian Prudential Regulation Authority's quarterly general insurance statistics, released on May 29, 2026 for the period to March 2026, as analysed by Insurance Business Australia, together with data from the consultancy Finity, the comparison site Canstar and the Insurance Council of Australia. This article summarises that analysis. An earlier version cited a survey and a report that do not appear in the source and have been removed.

Start with the insurers' side. Householders insurance, which covers the building and sometimes contents of owner-occupied homes, collected gross written premium of $3.82 billion in the December 2023 quarter and $4.49 billion in the December 2025 quarter, an increase of 17.4%, according to the APRA data in the article. Despite that growth, the line often loses money on underwriting. The householders insurance service result, which is the profit or loss from insurance activities, was negative in four of the ten quarters examined. The worst was the December 2025 quarter, with a loss of $1.08 billion, when net claims used up nearly 80% of premiums. The March 2026 quarter was close to break-even, with a negative $10 million on $4.25 billion of quarterly premium. The swings are linked to the timing of catastrophes: the June 2025 quarter showed a profit of $711 million, while the December 2025 quarter was the large loss.

Now the customers' side. Finity data cited in the article show that the average home premium rose 51% from 2020 to October 2025, from $1,940 to $2,938. Canstar figures show a further rise of 14% in 2025. These increases have far outpaced the growth of most household incomes. The Australia Institute estimated that about 1.4 million homes were uninsured or underinsured in 2025. APRA's climate vulnerability assessment found premiums rose an average of 7.2% a year from 2010 to 2025, against wage growth of 3.1%, and that about one in seven houses is uninsured today, which could rise to about one in four by 2050. These figures come from a separate Insurance Business report.

What explains the cost? The Insurance Council of Australia, the industry's trade body, points to several factors. Extreme weather is one: it says extreme weather events in 2025 cost $4.8 billion in insured losses from 294,000 claims. Another is development in high-risk areas, where more homes are built in places exposed to floods and fires. A third is the cost of rebuilding: it cites a 40% rise in building material costs since 2022, and asset values that have grown. The fourth is tax. The Council says that in New South Wales, up to 37% of a premium is tax once GST, stamp duty and the Emergency Services Levy are included. The article makes a practical point for brokers and homeowners: a building insured for $800,000 in 2021 might cost $1.1 million to rebuild now, so sums insured should be reviewed to avoid underinsurance.

Equity is a central concern. The Insurance Council says high flood risk is correlated with lower socioeconomic status, and reports that around 70% of households with the highest flood exposure live in areas where median income is below the national median. If those households face the steepest premiums and the greatest risk, they are also the ones least able to absorb a disaster. This is the group for which premium rises can lead to dropping cover, and the consequences fall on the household and any lender.

The policy responses discussed are about reducing the underlying risk and cost. Resilience and mitigation, for example flood levees, fire breaks and stormwater infrastructure, can reduce expected losses and therefore premiums over time, as can planning rules that steer development away from high-risk locations. Reducing taxes and levies on insurance is another option the industry raises, although governments rely on those revenues. The article argues that pricing pressure is likely to intensify.

What can homeowners do now? Check that the sum insured reflects the current cost of rebuilding, including higher building costs, since being underinsured can leave a gap after a total loss. Compare quotes, as prices vary significantly between insurers. Ask about discounts for mitigation measures such as upgrading roofs or installing flood barriers. Understand the excess and any exclusions, particularly for flood, which is defined differently by different insurers. If you are struggling to pay, speak to your insurer before cover lapses, because a gap in cover can be costly.

For lenders, regulators and governments, the data point to a sustained problem and not a one-off. The insurance line is growing in premium but not reliably earning an underwriting profit, which limits how much insurers can absorb before prices rise again. At the same time, household affordability is under strain from interest rates. The next APRA statistics, covering the June 2026 quarter, will show whether the March result of close to break-even was the start of a recovery or a lull between catastrophes.