With skyrocketing building insurance premiums, many Australians are struggling to find coverage as cyclone season approaches.
In an ABC report, 49-year-old central Queensland resident Midge Cohen shared that she does not have building insurance despite the threat of an early cyclone season, calling it a luxury that she and her 82-year-old pensioner mum cannot afford.
“The cost of living, with electricity, food, [and] petrol is just phenomenal,” Cohen told ABC. “Even just car insurance, health insurance, [and] pet insurance – I'm going to end up having to cancel my health insurance because it's 40 bucks a month and it keeps going up and up and up. You got nothing left at the end of the month.”
Cohen is among the estimated 11% of Australian homeowners exposed to catastrophic loss without building insurance, according to a 2020 Australian Competition and Consumer Commission report. In north Queensland, the proportion of uninsured people is even higher than 17% due to the high cyclone threat, pushing premiums into the unaffordable range.
Sharanjit Paddam, co-author of the Actuaries Institute's 2022 green paper on home insurance affordability, said more people in high-risk areas became unable to afford insurance coverage. Particularly, one million households have become vulnerable to climate risks because they spend more than four weeks of their gross annual income on home insurance.
The report warned that as climate change worsens, so will home insurance affordability pressure, with the impact far greater on vulnerable households than those in capital cities, making it more challenging to recover from natural disasters or prepare and pay for measures to reduce this risk.
