Douglas homeowners face higher home insurance premiums
CLIMATE CHANGE COSTS
Major research has revealed that climate change will push up home insurance premiums in Douglas Shire by as much as 45 per cent by the year 2050 – unless more is done by governments, business and councils to mitigate the effects of severe weather and events including cyclones.
The average premium in Douglas is expected to rise by to $5,464 a year by then, compared with $3,769 currently.
Such a rise would widen the gap in home insurance affordability between average and vulnerable households, and add more financial pressures to households already putting up with higher costs of living.
There are similar predictions for the neighbouring Cairns Regional Council area, where half of households can expect to spend more than 4.2 weeks of income on home insurance, compared with 2.9 now.
The average premium in Cairns is expected to rise by 55.9% to $5,819 a year, compared with the current $3,732.
Every council area in Australia was assessed in the research – and it was confirmed that residents living in Northern Queensland, Douglas Shire included, currently pay among the country’s highest amounts for insurance coverage – with mean annual home insurance premiums over $3,000 mostly from exposure to cyclone risk.
The Institute said vulnerable households are paying an average of 7.4 weeks of their gross annual income on home insurance, while the Australia-wide average is 1.1 weeks.
“Climate change will increase home insurance affordability pressure, but the impact will be far greater on vulnerable households – those already facing affordability pressures,” a report author, Sharanjit Paddam said.
But the report also has identified a range of measures and actions that can be taken by all levels of government – council, state and federal – than can help keep premiums down.
“By acting today, policymakers can begin to address home insurance premium affordability and the socioeconomic inequities of climate change,” Mr Paddam said.
“Policy changes will require strong collaboration between multiple parties, including local, state and Commonwealth governments, insurers and banks, builders and developers, and First Nations Australians.”
Recommendations included in the report were:
- structural solutions to improve infrastructure resilience (such as levees, floodways, and sea walls)
- managed retreat from risk-prone areas
- better land use and planning and changes to building codes to allow for the impact of climate change over time, and to reduce development in high-risk areas
- nature-based solutions for improving resilience
- close consultation with First Nations Australians on more resilient ways of living within the Australian landscape
- options to subsidise insurance for low-income households to supplement the cyclone reinsurance pool
- improved data collection and availability on home insurance affordability as well as vulnerable assets, natural hazards and the impact of climate change; and
- replacement of State stamp duty and levies with more equitable and efficient sources of revenue.
- If stamp duties were to be abolished, $200 on average could be saved on home insurance premiums in the region.