1 in 4 Australian households could be uninsurable by 2050

The trajectory: 520,000 to 2.7 million

The Actuaries Institute's 2024 Home Insurance Affordability Update identified approximately 520,000 Australian households in insurance affordability stress — defined as premiums exceeding one month's gross household income. That figure represented roughly 4% of all households.

APRA's March 2026 Insurance Climate Vulnerability Assessment extended the analysis forward. Under SSP2-4.5 (the “middle-of-the-road” emissions pathway), the number of households crossing the affordability threshold rises to approximately 2.7 million by 2050 — one in four Australian households. Annual insured weather losses increase from $7 billion (2024) to above $16 billion. Flood losses alone increase by 240%.

These projections come from stress testing the five largest general insurers in Australia — IAG, Suncorp, QBE, Allianz, and Hollard — which together cover approximately 90% of the residential market. The data reflects actual pricing models, not academic estimates.

For context on how this repricing is already affecting property markets, see our analysis of how climate risk is repricing Australian real estate.

Which regions are on the steepest curve

The insurance affordability crisis is not uniform. It is concentrated in six corridors where natural hazard exposure, population growth, and climate trajectory intersect. NSW and Queensland together account for 60% of all uninsured homes nationally.

The common thread is compounding frequency. Properties that experienced one major event per decade are now experiencing events every two to three years. Each event triggers insurer repricing. Each repricing pushes more households past the affordability threshold. The cycle accelerates.

The reinsurance withdrawal pattern

Most property owners never think about reinsurance — the insurance that insurers themselves buy to cover catastrophic losses. But reinsurance pricing is the primary driver of what you pay. When global reinsurers reprice Australian natural catastrophe risk, every domestic insurer must either absorb the cost or pass it through to premiums.

Munich Re and Swiss Re — the two largest global reinsurers — have publicly flagged Australia as one of the most climate-exposed insurance markets globally. Munich Re's 2025 NatCat Review noted that Australian flood and cyclone losses have exceeded actuarial expectations in four of the last five years. Swiss Re's Sigma Institute estimated that Australia's insured natural catastrophe losses will grow 5-7% annually through 2050, well above premium growth.

The practical consequence: reinsurance capacity for Australian nat-cat is contracting. Domestic insurers face higher reinsurance costs, larger retained losses, and pressure from shareholders to exit unprofitable geographies. This is already happening. ICA data shows that the number of insurers offering flood cover in the Northern Rivers dropped from seven in 2020 to three in 2025.

How climate projections feed insurance pricing

Insurers are no longer pricing risk from historical claims data alone. The major insurers now incorporate forward-looking climate projections into their pricing models. The data infrastructure behind this is more sophisticated than most property owners realise.

Under SSP2-4.5, NARCliM 2.0 projects that Western Sydney will experience approximately 30 days above 35°C per year by 2060, up from roughly 10 today. Rainfall intensity during extreme events increases 15-25%, meaning the same catchment produces more water in shorter periods. Extended fire seasons push the Forest Fire Danger Index into “catastrophic” territory more frequently.

For insurers, these projections translate directly into higher expected annual losses. For property owners, they mean that today's premium is almost certainly the lowest it will ever be for a climate-exposed property. A home that is marginally affordable to insure in 2026 may become genuinely unaffordable by 2035 — well within most mortgage terms.

What this means for property values and mortgages

The insurance affordability crisis has a direct transmission mechanism to property values. APRA now requires banks to consider climate risk in their mortgage lending under CPG 229. When a property's insurance becomes unaffordable or unavailable, the collateral that backs the mortgage is impaired.

This feedback loop has not yet triggered widespread lending restrictions. But APRA's CVA explicitly modelled collateral impairment scenarios, and the major banks are building address-level climate risk into their mortgage origination systems. The transition from portfolio-level to address-level risk assessment will, when it completes, create postcode-specific lending restrictions that compound the insurance problem.

Companies with property portfolios face a parallel obligation. Under AASB S2 mandatory climate reporting, approximately 10,000 entities must now disclose the percentage of their assets exposed to physical climate risks. Property holdings with deteriorating insurance trajectories become material disclosable risks.

Government responses: the Hazards Insurance Partnership

The federal government established the Hazards Insurance Partnership (HIP) in 2024 as a joint initiative between Treasury, APRA, and the ICA. Its stated goals are improving hazard data transparency, exploring reinsurance pool expansion beyond cyclones (the existing Australian Reinsurance Pool Corporation covers cyclone only), and developing mitigation investment frameworks.

Progress has been incremental. The ARPC cyclone reinsurance pool, established in 2022, has reduced cyclone premiums by an estimated $180 on average in northern Australia. But there is no equivalent pool for flood — the hazard driving the largest share of premium stress. Expanding the pool to cover flood would require substantially more government capital and is politically contentious.

At the state level, the NSW Climate Change and Natural Hazards SEPP (exhibited February-March 2026) proposes prescribing NARCliM 2.0 climate scenarios for all development assessment. If implemented, every DA in NSW would need to account for projected climate conditions — effectively building the insurance industry's forward-looking approach into the planning system.

The Productivity Commission's 2024 report on natural disaster funding recommended standardised hazard disclosure at the point of property sale. No state has yet implemented this, though Queensland's existing seller disclosure regime provides a partial model.

How to assess your property's trajectory

The gap between what insurers know about your property and what you know is the core problem. Five steps to narrow it: