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Climate crisis pushes up insurance costs: How pricey is your postcode?

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One million households in Australia are facing "extreme" levels of insurance stress due to extreme weather events.

Use the ABC's postcode tool to find out how increased climate risks could impact the cost of your premium where you live.

That's the finding of a new Actuaries Institute report looking at home insurance affordability – both today and in high- and low-emissions scenarios in 2050.

The grim stats follow a recent Climate Council projection which found that 521,000 properties in Australia could be uninsurable by the end of the decade.

In summary, the Actuaries Institute report found:

  • Climate change will significantly widen the gap between people who can and can't afford home insurance.
  • Some 10% of households in Australia (around 1 million) are classed as vulnerable today.
  • A "vulnerable household" is one that forks out an average of 7.4 weeks' pre-tax income on insurance premiums. These are present all across Australia.
  • With a "high emissions scenario", where temperatures increase by 3°C by 2100, affordability pressure would go up 20% for vulnerable households.
  • Higher insurance costs are being driven by an uptick in the number of devastating floods, storms, cyclones and bushfires.

Responding to the new research, Paula Jarzabkowski, an expert in financial disasters, told Finder she was "very glad" to see climate change directly linked to insurance pricing and affordability.

"This report very clearly says that when insurance gets to a certain percentage of income, it's essentially uninsurable. It's making it very clear that affordability is a key feature of insurability."

Jarzabkowski, a professor of strategic management at The University of Queensland Business School, added: "So far, we've been largely skirting around that issue."

Insurance affordability is a national problem

The report stresses that vulnerable households exist in every council in Australia, with some of the highest rates seen in metropolitan or inner-city areas.

For example, in the City of Melbourne, 1 in 5 households is currently under "extreme affordability pressure". This is defined in the report as spending more than 4 weeks of pre-tax income on insurance.

The Actuaries Institute report showed that Northern Queensland faces the highest median increase in affordability for home insurance.

Jarzabkowski commented: "We should look at Northern Australia and Northern Queensland as the canary in the coal mine, in the sense that climate change has been coming for a long time [in these areas].

"These insurance price rises have been coming for a long time [as well]. And we've been consistently looking the other way."

Insurance is up almost $1.5K for some

New Finder research underscores the challenge that many already face both in Queensland and right across Australia.

Published this week, our figures showed that home insurance prices went up $1,444 in parts of North Queensland in 9 months alone.

See how home insurance pricing has changed across Australia in the past year.

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