'Australians Struggling: Unable to Afford Staying, Rebuilding, or Insuring Their Homes'

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“If you’re not financially well-off, purchasing property in areas like this might not be advisable because insurance premiums are prohibitively high, making it difficult to secure financing,” Anthi Emmanuoil-Playne explained to Insight.

Emmanuoil-Playne and her partner initially moved to the town in 2022 after getting priced out of another area.

“We used up all of our life savings buying this place. This is all we could afford.”

It wasn’t long after they moved in that tragedy occurred. In February 2024, severe fires ravaged the Grampians as well as nearby towns, including Halls Gap and Pomonal. The inferno consumed their 1.6-hectare property, completely destroying their residence.

The inside of a house destroyed by bushfire.

Bushfires in 2024 devastated Anthi Emmanuoil-Playne home, which is prohibitively expensive for her to rebuild. Source: Supplied

Emmanuoil-Playne had insurance and was given around a $600,000 payout, but says it wasn’t enough to rebuild in a way that meets Bushfire Attack Level (BAL) ratings, which means her home is resistant against future fires — and less risky for insurers.

“We wanted to put in all of the systems required — the sprinklers, the double glazing … and for every BAL level you go up, it’s an extra $10,000.”

To add to the sting, building material costs have tripled.

Emmanuoil-Playne and her partner are rebuilding with fire safety in mind, knowing that the area will almost certainly experience more natural disasters and insurance costs may be out of reach.

“We haven’t re-engaged with this insurance company to see whether or not we can afford it. I’m a bit scared about looking,” she says.

“If we can’t afford it, the reality is that we have to move … [but] I don’t know of many other places we could actually afford to move to.

“We’re really stuck.”

With insurance, ‘onus is on you’

Elizabeth Mackney has lived in the northern NSW city of Lismore for over two decades and was accustomed to the extreme weather of the area. But as Cyclone Alfred approached the coast in March of this year, she braced for the worst.

Mackney and her son were still living in a flood-damaged home following the 2022 Lismore floods after a three-year battle with her insurer, waiting for her claim to be resolved.

“I remember saying to the kids when it happened: ‘We have to expect that we could be dealing with this for 12 months’,” she told Insight.

A selfie of a middle-aged woman with glasses.

Elizabeth Mackney has lived in a floor-damaged home for around three years. Source: Supplied

Mackney spent the next three years battling her insurer after they disagreed over the price of repairs. She ended up taking them to the Australian Financial Complaints Authority, which ruled in her favour.

“The onus is completely on you to make sure they are delivering the product that you have paid them for.”

In February of this year, she finally received a payout from her insurer. During that time, her children moved out of the home because of health concerns, and the strain of the situation contributed to a marriage breakdown.

“Our house is still not repaired because we’ve only just received the payout.”

Insurance ‘telling us’ these places are unsafe

When it comes to the high price of insurance, Andrew Hall, CEO of the Insurance Council of Australia, which represents the country’s general insurance industry, says he “understands the frustration” many people feel.

But he said it’s not a case of price gouging, with premiums determined by multiple factors.

He says Australia’s insurance sector has been through a period of losses due to costly insurance events and inflation.

“The floods in 2022 resulted in the largest insurance losses we’ve encountered. This past year marks the first occasion where companies have seen a return to profitability. This is largely due to the absence of natural disaster events during the first half of this financial year.”

A graphic image showing a silhouette of a young family with a burning house on the left and a flooded house on the right.

More and more properties across Australia are becoming too expensive to insure. Source: SBS

In 2024, Australia’s insurance industry recorded an after-tax profit of $6.1 billion — three times higher than the previous five-year average, according to KPMG.

When it comes to property insurance, Andrew explains that it’s the premiums of the many that pay for the claims of the few. But the problem is, Australia doesn’t have a large enough population to cover high numbers of huge insurance payouts in the event of a big disaster, so the industry has to rely heavily on reinsurers (companies that insure insurers) based overseas.

“We need access to more capital to underwrite the risks we have in this country,” he says.

And global reinsurers are becoming increasingly wary about Australia. Leading global reinsurer Swiss Re, for example, has acknowledged the impact of rising natural disasters, which contribute to increased claims and potentially dented profits.

Economist Nicki Hutley researches the costs of insurance and extreme climate events for the Climate Council. as insurance companies seek to spread the risk, which means more people everywhere will go without insurance or become displaced.

Graphic showing how many properies around Australia are at risk of extreme weather damage.

Source: SBS

Climate Council analysis shows 652,424 properties (4.4 per cent or one in 23) across the country are already at high risk from one or more hazards — properties for which insurance is often already unaffordable or unavailable. This number is expected to grow to 746,185 (5 per cent) by 2050 and 1.3 million (8 per cent) by 2100.

“There are areas of Australia that now have so many properties that are effectively uninsurable, meaning too expensive. It’s not safe for people in certain areas to stay in those places, and the insurance is telling us that,” she said.

Rebuild costs higher than insurance

Coupled with the issue of high premiums is the issue of underinsurance, with people unsure about what their property insurance actually covers.

A federal inquiry into insurers’ responses to 2022 flood claims across Queensland, NSW, Victoria and Tasmania found people didn’t always understand the level of risk they were taking on.

Professor Paula Jarzabkowski, a financial researcher and expert on insurance, says we need to increase our risk literacy.

“We need clearer contracts. But we also need to take responsibility for our own risk. Now perhaps more than we used to think we had to.”

Hall from the insurance council agrees. “Plain English is critically important,” he says. “And it’s something the industry has been working on.”

He says insurers aim to restore and rebuild the property that was there but because of increased resilience compliance, the sum insured is often lower than what it costs to rebuild.

The 2019 bushfires on the south coast of NSW were a prime example.

“A lot of people had their sum insured set at about $400,000 or $500,000 because that’s what they thought their property was worth. [But] when you add in the Bushfire Attack Level rating requirements, it’s often double that,” he said.

“Think about if the worst happens in this current day, what would it actually cost to rebuild your property?”

Governments stepping in

State governments take a significant proportion of property insurance premiums in the form of GST, stamp duty and emergency service levies. For this reason, Hall believes they could boost grants to help make properties more resilient.

“I think governments need to look at these sorts of programs after these events to help people get back into a better home than the one that they had insured themselves for.”

The federal inquiry made 86 recommendations, including banning development in serious floodzones and introducing a nationwide buyback scheme, where a government agency or authority buys homes in high-risk areas with the aim of relocating residences.

Denise Hutch was offered a buyback from the NSW government’s Resilient Homes Program for her Lismore home after the Wilson River flooded in 2022.

“It’s on the floodplain and they want everybody off it,” she says.

When water rose to just below her ceiling, Hutch climbed out of her attic window and onto her roof, where she was rescued by SES volunteers.

A selfie of a woman in a checked shirt and red glasses.

Denise Hutch lost her uninsured home in the 2022 Lismore floods. Source: Supplied

Like Emmanuoil-Playne, she had bought in Lismore because it was affordable, though like many in the area, couldn’t afford the flood insurance, so took the risk and went without.

She’s grateful for the buyback offer, but says the first offer wasn’t enough to buy anywhere else so she’s now awaiting a second.

“If that’s not enough money, I don’t have a lot of choices after that.”

Reducing the risk

Experts agree the best way to make home insurance more affordable is to reduce the risk.

Hall says this can be achieved by increasing the durability of our homes and stopping building on floodplains.

“We have to act now. The longer we put this off, the more it’s going to cost everybody,” he said.

Hutley says while making a property resistant to fire or flood can help reduce risk, it can be prohibitively expensive, especially without government grants. And in some areas, we simply shouldn’t be rebuilding at all, she adds — which has immense social and economic consequences.

“You’re basically asking communities to disband. What happens to those people, their work, their school, their communities? Where do they go when there’s already a housing affordability crisis in Australia?”

The most important way we can reduce risk, she says, is “mitigating against climate pollution in the first place”.

Graphic image showing which federal electorates have the highest percentage of properties at risk from climate change.

Source: SBS

Jarzabkowski says to keep people insured, we need to make houses more durable and move people away from high-risk areas.

“We actually need to revisit the way society wants to take risk … otherwise, we’re going to have hollowed-out communities. We’re going to have a few wealthy people who can look after themselves, but even they will be at threat.

“And we’re going to have a lot of people whose lives have broken down, their livelihoods have broken down. And I think we’re already seeing the start of that.”

As insurance costs skyrocket, Anthi Emmanuoil-Playne worries about the future of her town as a whole.

“We’ve had some people who have already left,” she says.

“I think house prices are still reasonably affordable. But it’s more about everything else that goes along with it. We had friends recently tell us that to insure their place, it was going to cost them $30,000 for the year.”

“In the future, I don’t think this town will exist.”

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