Rising climate risks are costing residents,but we can fight back

The rising cost of living is a challenge many people are feeling, but lately, I’ve been hearing about one which is not always top of mind – home insurance. Since 2022, insurance premiums have surged an average of 32%. For those in flood-prone or high-risk areas, premiums can exceed $30,000 annually. It’s no surprise during recent doorknocking visits, residents told us how much this is impacting them, not only financially but also emotionally, as they worry about the potential future un-insurability of their homes and the effect on property values.

The recent State of the Climate Report from the Bureau of Meteorology and CSIRO provides a stark warning: climate change is accelerating, bringing increased risks of extreme weather that will impact Australian communities and economies for decades. Unless we act decisively on decarbonisation and building more resilient homes to these extreme weather events, our cost of living will continue to rise. Increased temperatures mean more humidity, more intense rainfalls, often described as ‘rain bombs’, with sea level rises, coastal floods and impacts from storms becoming more frequent. 

The Northern Beaches, identified as a high coastal erosion area in NSW’s Disaster Mitigation Plan, is at great risk. Whilst I will never stop pushing to mitigate the risks by reducing emissions, we must start preparing and adapting our communities. Preparing infrastructure for these changes cannot fall solely on governments and paying for the consequences cannot fall solely on citizens. Private sector support and a system rewarding homeowners who invest in making their homes more resilient to extreme weather events is needed.

The current system falls short. Residents shared stories of substantial home improvements, like raising homes to protect against flooding, only to see little or no recognition from insurers. Despite these adaptations, their premiums remain exorbitantly high – or they struggle to find any insurance at all as insurance companies spread their risk across post codes.

Over-regulating insurers is not the answer and could drive them out of the market, as has happened in some parts of the United States. The responsibility for climate adaptation needs to be shared across public and private sectors, including individuals.

To address this, I have called for increased funding of the Resilient Building Council. This would involve the development of a certification scheme for climate-resilient homes. The goal is to incentivise homeowners to invest in resilience measures and putting downward pressure on insurance costs and saving money in disaster relief in the long term.

Research shows every dollar invested in climate adaptation returns up to $11 in avoided disaster recovery costs. This matters. I am discussing with the government greater reporting of possible costs avoided as part of budget papers. 

To explore solutions, I recently convened a Climate Risk and Home Insurance Roundtable with experts from banking, finance, insurance, superannuation, and local government, including Assistant Minister Stephen Jones. These discussions emphasized the need for immediate action and the importance of long-term strategies to protect residents and keep insurance affordable.

That’s why I am preparing a private member’s bill to legislate a climate risk framework that requires regular National Risk Assessments and Climate Adaptation Strategies, mandates best-practice methodologies, and includes transparent reporting on the costs of climate change and disaster recovery. We can’t insure our way out of the climate crisis so it’s time to act.