Reuters
[Source: Reuters]
Home insurance is becoming unaffordable for a growing number of Australian households as increased climate threats drive up their premiums, potentially putting billions of dollars in mortgage loans at risk, a report said.
As of March 2024, 15% of Australian households were experiencing home insurance affordability stress, which is defined as having premiums that cost more than four weeks’ of their incomes, the report from the Actuaries Institute found.
That is equivalent to 1.61 million households, compared to 1.24 million found to be facing affordability stress a year ago – an increase of 30%.
Rising insurance costs have fuelled inflation in Australia and there are signs that some homeowners can no longer afford to protect their homes due to climate-related risks and high construction costs.
The report estimated that 5% of Australian households with home loans were experiencing extreme pressures, with their insurance premiums averaging A$5,216 ($3,505) a year, more than double the average of A$2,124.
Those households facing the most extreme affordability stress have about A$57 billion in outstanding mortgage loans as of March, representing 3% of all home loan assets, it said.
The report estimated that due to heightened risks of floods and cyclones, half of households in southwestern Queensland, the Northern Rivers region of New South Wales and regional Western Australia faced premiums that cost more than one month’s income.
