The National Insurance Brokers Association (NIBA) has called on governments and industry to focus on home insurance affordability, climate resilience, and tax settings, citing new regulatory analysis that points to a widening home insurance protection gap. Drawing on work by the Australian Prudential Regulation Authority (APRA), NIBA is proposing long-term mitigation funding, targeted support for high‑risk properties, and changes to insurance-related taxes and charges.
NIBA says APRA’s Insurance Climate Vulnerability Assessment (Insurance CVA), released as Mind the Gap: An Insurance Climate Vulnerability Assessment, is consistent with what brokers report in areas exposed to floods, bushfires, cyclones, and severe storms. According to NIBA, affordability pressures in these markets are leading some households to reduce cover or forego home insurance. “APRA’s report underscores what brokers have been experiencing on the ground. Climate risk is already putting pressure on affordability, increasing underinsurance, and threatening the ability of too many Australians to protect their home,” NIBA CEO Richard Klipin said. He linked the findings to the timing and focus of public investment. “If we do not invest now in resilience, mitigation, and smarter long-term planning, we risk sleepwalking into a future where more households are left exposed and more communities become harder to insure. That is bad for consumers, bad for recovery, and bad for Australia’s economic resilience,” he said.
As part of its 2026-27 pre‑budget submission, NIBA has recommended expanding and indexing the federal Disaster Ready Fund as a rolling 10‑year program and establishing a national co‑funded household mitigation scheme. Under NIBA’s proposal, the scheme would support upgrades in high‑risk locations, such as measures to strengthen homes against cyclone, bushfire, and flood. NIBA has also highlighted the impact of state and federal taxes and charges on premium levels, including stamp duties, emergency services levies, and GST, which it says can add up to 70% to the cost of cover in some jurisdictions and contribute to underinsurance and non‑insurance. “The answer cannot be to wait until after the next disaster and rebuild again at greater cost. We need coordinated action that reduces risk before disaster strikes,” NIBA president Nick Cook said.
APRA’s Insurance CVA uses stress‑test scenarios to assess how home insurance affordability and coverage for freestanding houses may change to 2050. Working with five major general insurers, APRA modelled two climate pathways based on Network for Greening the Financial System assumptions: a “current policies” scenario with higher physical risk and a “delayed transition” scenario with more abrupt policy action after 2030. APRA estimates that about one in seven Australian households in freestanding homes is currently uninsured. Under both scenarios, that share could increase to around one in four by 2050, implying about one million additional households without home insurance. The regulator defines insurance as unaffordable where annual premiums are equal to or greater than four weeks of household income.
Across the two scenarios, APRA attributes most of the projected increase in the protection gap to climate-related drivers. In the higher physical risk scenario, expected annual weather‑related losses across all homes are modelled to rise from under $7 billion in 2024 to more than $16 billion by 2050, putting upward pressure on premiums. In the delayed transition scenario, sustained construction cost inflation and weaker income growth mean premium increases outpace household income even where changes in physical hazard are less marked.
The Insurance CVA indicates that regional and rural communities already have higher rates of non‑insurance than capital cities and are projected to see larger increases. APRA’s results suggest that, at present, about 11% of households in capital cities are uninsured, compared with roughly 20% in regional centres and 25% in rural areas. By 2050, those proportions are projected to approach 20% in capital cities, exceed 30% in regional centres, and surpass 40% in rural communities under both climate scenarios. New South Wales and Queensland are identified as having the largest concentration of uninsured homes, reflecting both their share of the national housing stock and the prevalence of high‑hazard areas, particularly those exposed to flood. APRA’s modelling suggests that around 60% of uninsured homes nationwide could be in these two states both now and in 2050.
APRA links a widening protection gap to potential consequences for households, insurers, banks, and governments. For households, higher non‑insurance rates raise the likelihood that a severe weather event will produce uninsured losses, affecting wealth and the capacity to service mortgages. For banks, greater concentrations of uninsured or underinsured collateral in hazard‑exposed regions may increase credit risk and potential losses. For insurers, persistent affordability issues and lower coverage in high‑risk communities may prompt closer scrutiny of market outcomes and expectations of public intervention.
The Insurance Council of Australia (ICA) has echoed many of the themes in APRA’s assessment, including the need for additional investment in physical mitigation and changes to policy settings that affect availability and affordability of cover. APRA’s analysis is “not a forecast; it’s a worst-case scenario if extreme weather continues to worsen and further risk is baked into our system. The policy choices around investment in mitigation for homes which governments make now can help to prevent rising risk,” ICA CEO Andrew Hall said.
Hall also pointed to similar pressures in other jurisdictions. “This is not a challenge unique to Australia – governments and markets around the world are grappling with the same pressures. But if we act now, we can lead the world in resilience, protecting our communities and making insurance more available and affordable around the country,” he said. The ICA has proposed a dedicated Flood Defence Fund to reduce the estimated $6 billion annual economic impact of flooding and has advocated for a national hazard database accessible to governments, households, and businesses to inform planning, building, and insurance decisions.
