Key Points
- One in eight households can no longer afford home and contents insurance, according to global insurance giant Swiss Re.
- The firm says a lack of risk reduction and planning laws that allow development on flood-prone land is to blame.
- Representatives from the company will appear before a public hearing on Friday.
One in eight households can no longer afford insurance and a global insurance company has blamed a lack of risk reduction and planning laws that allow building on flood-prone land.
Global insurance giant Swiss Re has warned that the risk of large insurance losses needed to be reduced for reinsurance to remain sustainable.
The company's concerns are revealed in a submission to a House of Representatives inquiry into the insurance industry's response to major flood disasters in eastern Australia in 2022.
Insurers have been pushing up prices for a few reasons - the cost of building work has surged because of supply chain shortages and climate change is fuelling more frequent natural disasters and jacking up reinsurance costs.
The cost of home and contents insurance had now become unaffordable for one in eight households in 2023, according to Swiss Re.
And that is up from 2022 when it was one in 10 households.
Swiss Re blames the trend on the lack of risk reduction and planning laws that allow housing development on flood-prone land.
"Risk reduction is the only way to lower the risk and therefore improve affordability," the company said in its submission.
Swiss Re wants stronger building codes and better land use planning that consider the changing climate over multiple decades.
Representatives from the company will appear before a public hearing on Friday.
The committee will finalise a report by September.
