The postcodes with Australia's least affordable insurance

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No matter where you live in Australia, it seems like insurance is one of those bills that never stop increasing.

However, for some areas of Australia, those insurance rises are so large that it makes the very prospect of being able to afford insurance unachievable.

A new research paper from the Actuaries Institute has found that households in up to 12 per cent of Australian postcodes may face pressure meeting annual home insurance premiums, a figure that represents around 7 per cent of Australia’s population.

According to the research, home insurance premiums can vary from less than $1000 per year to above $10,000 per year, based solely on the location of a property. This is largely due to the approach for pricing risk for natural disasters.

As a result of the natural disaster pricing, houses in northern Australia pay much higher premiums than southern locations.

Actuaries Institute president Hoa Bui said that when housing affordability and cost of living pressures arise, property owners may let policies lapse or purchase less insurance than is needed.

“This gives rise to what is considered a ‘protection gap’, property owners without sufficient insurance to recover well from loss events,” Ms Bui said.

“All stakeholders have a role to play in improving affordability, especially in northern Australia, where this is most keenly felt.

“There is a compelling public policy case for examining cross-subsidising some premiums for those experiencing stress.”

The paper explains that there is a compelling case for governments to provide some support for those facing unaffordable premiums while still using economic incentives to encourage better behaviour to reduce risks in the long term.

Some of the support measures include direct subsidies or rebates, changing how the insurance risk is pooled, or changes to the insurance products or the way premiums are designed.

The paper states there is need for temporary and targeted government intervention to help manage affordability, in at least the near term.

Report author Rade Musulin said that any measures to address affordability should target the vulnerable.

“There are complex trade-offs to be considered as part of solving problems of affordability,” Mr Musulin said.

“The overall goal should be to improve the risk profile of the population to maximise insurability of properties and minimise the need, in the longer term, for ongoing government intervention to promote resilient communities.

“We need to future proof Australia in a cost-effective manner to make affordable insurance available to as many people as possible.”

If you are struggling to pay your home insurance premiums, here are some tips to reduce what you pay:

  • shop around for a better deal
  • look at combining your insurance to get a discount
  • increase your excess
  • ask your insurer about discounts
  • pay your bills annually instead of monthly.

Do you live in northern Australia? Are you struggling to pay your home insurance premiums? Are you worried about being under-insured?

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Written by Ben

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