Climate change means 1 in 25 homes could become uninsurable by 2030, report warns

About one in 25 Australian homes are at high 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 homes for some of the most affected regions, including parts of Brisbane, the Gold Coast, Greater Shepparton, Ballina and Port Adelaide.

The report authors warn that Australia is heading for an “insurability crisis” as climate change increases the risk of worse weather extremes, resulting in “skyrocketing” insurance premiums.

“We’re talking about half a million properties — it’s not insignificant,” said Nicki Hutley, report co-author and economist with the Climate Council.

Of the top 10 electorates to be impacted, most (80 per cent) are due to the increasing insurance risk posed by riverine flooding, according to the “Uninsurable Nation” report, which was released today.

Bushfire and surface-water flooding, or overland flooding not associated with river swelling, also feature prominently in pushing insurance premiums higher in the coming years.

When a property becomes “effectively uninsurable”, it means the insurance premiums are so high as to be unaffordable to the average home owner, according to Karl Mallon from Climate Valuation, who provided the Climate Council with the data.

Once there is more than a 1 per cent chance in any given year of a property incurring major damage from an extreme weather event, that’s when premiums start to escalate, Dr Mallon said.

“Once you exceed that threshold, typically the costs start to increase; so instead of paying $1,000 a year, you get $3,000 a year and it climbs — we’ve seen premiums of $30,000 a year,” he said.

“Essentially, we stand by the view that once you get above these levels, there will be many people who cannot afford this insurance.”

A map of Australia showing percentage of uninsurable homes.
The distribution of uninsurable homes by state by 2030, as projected by the Climate Council and Climate Valuation.(Supplied: Climate Council)

Queensland is projected to be the hardest-hit state, with up to 193,000 properties (6.5 per cent of the total number) deemed to be at high risk of uninsurability by 2030, followed by New South Wales with more than 148,000 properties.

The findings were based on a business-as-usual, high emissions outlook for climate change. Dr Mallon said what banks and insurance companies choose to base their premiums on varies, but they’re required to factor in business-as-usual forecasts.

“The kind of guidance coming out from the governing regulatory bodies in Australia and around the world, they almost all insist that every company have a view on the high emissions scenarios,” he said.

“Unfortunately, that’s where we’re tracking, is along those pathways.”

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