Insurance Costs Shift as Climate Risks Grow

As insurers face increasing losses from extreme weather events, they are changing how they assess risk. This shift carries wide-ranging effects for everyday Australians. There is hope that smarter disaster planning by both government and individuals will help bring premiums down, but growing climate uncertainties could keep costs high.

Australians are now seeing how a changing climate is affecting the home insurance market. Insurers are using more dynamic environmental data to set premiums, which is prompting a reassessment of how homes are designed, built and protected. Governments are also being encouraged to invest more in disaster mitigation such as flood levees and firebreaks to reduce community-wide risks.

Modelling from a major insurer shows that natural disasters currently cost the economy $38 billion each year. That figure could climb to $73 billion annually by 2060. However, experts believe proactive investment in preparedness has the potential to significantly lower those projections. Some companies are trialing tools that help homeowners evaluate their own risk, such as mobile apps that measure bushfire resilience based on factors like home design and nearby vegetation.

By taking steps like clearing gutters or installing cyclone-resistant roofs, Australians may be able to reduce their insurance premiums. Still, this individual effort must be supported by broader structural improvements. Insurers recognise the importance of maintaining pooled risk systems that protect vulnerable groups, rather than only rewarding those who are well-resourced or highly prepared.

Industry figures point to three key factors that affect premium pricing. These are environmental exposure, the type and location of buildings and homeowner behaviour. Risk assessments are also becoming more difficult due to changing weather patterns such as cyclones moving further south and more frequent east coast low-pressure systems. On top of that, rising construction costs and property values are driving premiums higher and adding unpredictability to the market.

The issue is not only about financial impact. It also concerns community resilience. From mould damage to long-term displacement, the effects of extreme weather stretch far beyond money. Groups focused on disaster preparedness believe that an informed and connected population is just as important as stronger infrastructure. In the long term, insurance providers say that flexible, data-driven pricing can guide where investments in resilience are most needed, but this can only work if Australia moves forward with national coordination and shared responsibility.

Source: Australian Financial Review, Australia Institute, The New Daily

Doga Sydney - Corporate Cuddles & Puppy Yoga

Take what you’re doing offline and circle back on team wellness because real team bonding happens with puppies, not PowerPoint. Give your team an event they’ll actually look forward to with Puppy Yoga!

We’ve got you covered with Corporate Cuddles and Puppy Yoga 🐶