Shock figures: The true cost of Australia’s extreme weather crisis
Seven in 10 high-risk flood zone homes have no insurance coverage as premiums soar beyond $30,000, leaving Australia's most vulnerable exposed to catastrophic losses.
Australians are being stung by extreme weather insurance losses five times higher than they were in the 1980s, as those most at risk continue to struggle paying soaring premiums.
A report released by the Insurance Council of Australia today shows that Australia has
consistently ranked second only to the United States for both insured and broader economic extreme weather costs when also put against France, Canada, Germany and New Zealand.
It found the average annual insurance and economic loss per Australian from floods, bushfires, storms and extreme cold temperatures soared from $19 and $60 in the 1980s, respectively, to $109 and $193 by 2024.
Insurance Council of Australia CEO Andrew Hall said: “These events are not getting any cheaper, and the more we put off doing the investment and the work we’ve got to do in resilience and mitigation, the more it’s going to cost us as a country.”
The 2024-25 Insurance Catastrophe Resilience Report found that exposure to extreme weather risks was increasing as cyclones and severe storms hit locations previously at lower risk.
Over the past 12 months, insured losses reached almost $2bn across the North Queensland Floods ($289m), Ex-Tropical Cyclone Alfred ($1.43bn), and the Mid North Coast and Hunter floods ($248m).
The ICA has found that of the 242,000 Australian homes facing severe to extreme flood risk, 77 per cent did not have flood cover and 70 per cent were in areas where the average income is lower than the national median.
It is estimated that if just 18,600 of those properties needed to be rebuilt, using average home building prices, the bill would be more than $9 billion.
In the flood risk areas, it was also found many nominal insurance premiums exceed $7,000 and in some cases more than $30,000, and those who did pay were often underinsured.
Mr Hall said Australia was in the middle of a “perfect storm” — a collision of weather events, high inflation and high population growth.
He said Queensland had done the best job of any state for funding disaster resilience and betterment programs.
He said the federal government’s five-year Disaster Ready Fund — that offers up to $200 million annually for projects focused on disaster resilience and risk reduction — was a significant investment.
But state governments had not pitched enough mitigation projects for the cash.
“If you can reduce risk in high risk areas at a community level, you will bring downward pressure on the insurance premiums,” he said.
“We know where flood homes are, we know the probability of them flooding and the frequency of it happening.
“More needs to be done in terms of investment in protecting homes or making them resilient.”
The ICA is still pushing for the establishment of a $30 billion Flood Defence Fund.
Mr Hall said demand for insurance would continue to increase but with better analysis of risks and more money flowing to resilience instead of recovery, premiums could become more affordable.
“Once we can get a better line of sight over what that flood resilience looks like, insurers can then probably better assess and … target products for people to take cover in those risk
“What we are seeing is insurers are going to get better at underwriting.
“They’ll be able to do a much deeper analysis on all of their risks and price them more accurately.”
Average annual insurance loss per person ($US, inflation-adjusted)
1980-1989 vs. 2020-2024
France = $5 vs. $32
Canada = $7 vs. $81
Germany = $8 vs. $67
New Zealand = $12 vs. $172
Australia = $19 vs. $109
United States = $21 vs. $272
Average annual economic loss per person ($US, inflation-adjusted)
1980-1989 vs. 2020-2024
France = $17 vs. $76
Canada = $20 vs. $125
Germany = $19 vs. $166
New Zealand = $27 vs. $263
Australia = $60 vs. $193
United States = $56 vs. $451
Truckie injured, highway closed as crash causes diesel spill
