Bombshell warning one million more Aussie homes at risk

15 hours ago 3

Areas of Southport suffered severe damage during a Christmas Day storm including this one from a fallen tree on the corner of Alicia and Shirley St in Southport. Picture Glenn Hampson

Australia is hurtling towards a full-blown insurance catastrophe, with a bombshell report from Australian Prudential Regulatory Authority warning extreme weather is pushing the nation to breaking point – leaving a million more families exposed.

Under its worst-case scenarios, the financial hit is staggering – annual losses from extreme weather are tipped to more than double from $7 billion to over $16 billion, a surge that threatens not just homeowners but the entire economy.

“Without intervention, Australia will continue to spend billions rebuilding the same homes in the same flood-prone locations, tying up resources that could otherwise be deployed to deliver new housing,” APRA warned.

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Severe Tropical Cyclone Narelle was category 3 as it began to impact the eastern Top End, but was building to CAT5 at sea.

Its landmark report released Tuesday warned urgent and ambitious action and investment was required to protect communities from the escalating impact of extreme weather.

“While the number of properties currently impacted by severe and extreme risk is low relative to the number of properties overall, the cost of repairing and rebuilding these properties is significant,” it said.

“For example, analysis undertaken by Aon shows that 25 per cent of the cost of repairing or rebuilding properties damaged by flood is driven by just 11 per cent of the most at-risk properties.”

The result was rising premiums borne by everyone, which had already driven nearly 5 per cent of Aussies to no longer be able to afford home insurance at all, according to an iSelect survey.

Regional communities would be smashed the hardest, with insurance gaps in rural areas forecast to blow out beyond 40 per cent, according to APRA – leaving close to half of households financially exposed when disaster strikes.

APRA has issued a stark warning that a million more homes will be at risk now. Picture Glenn Hampson

The Cairns Northern Beaches experienced severe erosion due to very high tides and a storm surge off Tropical Cyclone Narelle – with the council lifeguard hut and a nearby tree falling into the sea at Holloways Beach. Picture: Brendan Radke

Insurance Council of Australia CEO Andrew Hall stressed the scale of the threat, warning “APRA’s analysis is not a forecast, it’s a worst-case scenario if extreme weather continues to worsen and further risk is baked into our system”.

APRA member Suzanne Smith issued a warning that “when homes are uninsured or underinsured, losses are more likely to be borne directly by households, banks or by the government”.

iSelect comparison expert Sophie Ryan said the country had entered a “new era” of unpredictable weather, hitting in quick succession and outside traditional seasons.

“If you leave changes to the last minute, you may be too late,” she said. “Once a weather event or disaster is declared, insurance embargoes come into place … that’s why it’s crucial to check your cover well in advance of any storms.”

Ms Ryan urged households to act before it’s too late, even suggesting locking in a yearly insurance check.

A storm was strong enough to snap a crane at a Loders Creek development site. Picture Glenn Hampson

“Use your renewal notice as a prompt, or mark a date in your calendar – potentially in August or September – to review your policy before the season begins around October,” she said.

“Really go through your cover with a fine-tooth comb … If you’ve renovated or bought any high-value items, you’ll want to make sure these changes are reflected so you’re not underinsured.”

She also warned key details varied between insurers, with flood, fire and storm often listed as “defined events” but subject to exclusions buried in fine print.

“Doing a policy audit is also a great opportunity to shop around,” she said. “People who have been with the same insurance brand for a number of years may be pleasantly surprised.”