Climate Threats Rise, Australians Struggle to Pay Home Insurance

Australia (Reuters) — More Australian households are struggling to afford home insurance as the threat of climate change pushes up premiums, potentially affecting billions of dollars worth of Australian mortgages, a report has found. Actuaries Institute on Monday (25/8). The report shows that by March 2024, 15% of Australian households will face “affordability stress”, or “affordability burden,” which is defined as having to pay premiums amounting to more than four weeks of their income. This figure is equivalent to 1.61 million households—up 30% compared to last year, which was 1.24 million households. Rising insurance costs have fuelled inflation in Australia, and there are indications that some homeowners can no longer afford to protect their homes from climate-related risks and high construction costs. “Unfortunately, we expect this to continue as the risk of natural disasters associated with climate change increases, which will continue to drive premiums up,” said the report’s lead author, Sharanjit Paddam. The report also estimates that 5% of Australian households with mortgages face extreme affordability burdens, with their average insurance premiums reaching A$5,216 (around Rp54 million) per year—more than double the average of A$2,124 (Rp22 million). Those worst off (overall) had about A$57 billion (Rp600 trillion) in mortgages …