The Royal Automobile Association of South Australia (RAA) is calling for increased government investment in disaster mitigation and resilient housing, warning that without proactive measures, rising insurance costs may become unsustainable for many households.
An RAA survey found that 80% of South Australians are concerned about the growing frequency of natural disasters and their potential impact on homes, while 63% support additional funding for disaster mitigation efforts to address risks from bushfires and floods.
RAA chief executive officer Nick Reade said that climate-related disasters are increasing the financial burden on homeowners – an issue that aligns with findings from the Actuaries Institute’s latest report on home insurance affordability.
The Actuaries Institute’s Home Insurance Affordability and Home Loans at Risk Report found that 1.6 million Australian households experienced insurance affordability stress in 2024 – a 30% increase from the previous year.
The study revealed that households in this category spend an average of 9.6 weeks of their gross income on home insurance, with 15% of Australian households paying premiums that exceed one month’s gross annual income. This figure has risen from 12% in the previous year.
The report also found that homeowners in high-risk regions, particularly those prone to floods and cyclones, have faced insurance premium increases of more than 30%, significantly higher than the national average increase of 9%.
Reade emphasised that the risk to properties is rising – putting pressure on insurance affordability not just in Australia, but globally.
“Even before the [Los Angeles] bushfires, eight in 10 of our members were already concerned about the impact of climate-related disasters on their homes,” he said. “We don’t want a situation where the risk continues to increase to the point where insurance becomes unaffordable or inaccessible for some households.”
To address these concerns, RAA is advocating for several policy changes to improve disaster resilience and help stabilise insurance costs. The key recommendations include:
Reade said that while insurance plays a crucial role in post-disaster recovery, more investment is needed to reduce risks before disasters occur.
He pointed to the Productivity Commission’s findings that 97% of disaster funding in Australia is directed toward recovery and clean-up, while only 3% is spent on mitigation and resilience measures.
“We need greater investment in disaster mitigation infrastructure, better land-use planning to make sure we’re not building homes in high-risk areas, and we need to build more resilient homes,” he said.
He added that redirecting funds from insurance taxes toward disaster mitigation could help stabilise premiums over time and protect more homes from damage.
“We have more than 825,000 members in South Australia, and our survey shows two thirds of respondents want more funding allocated to mitigation measures,” Reade said.
