How home insurance costs changed after Australia's major disasters

Home insurance premiums in northern Australia rose 178% in real terms between 2007-08 and 2018-19, more than three times the 52% increase recorded across the rest of the country. By 2018-19, the average combined home and contents premium per policy in northern Australia was about $2,500 a year, compared with roughly $1,400 elsewhere.

Nationally, insurance prices then rose 16.4% in the year to March 2024, the largest annual increase since 2001. Growth then slowed, and two capital cities recorded annual declines in insurance prices by February 2026.

The period covered includes major floods, cyclones and increases in reinsurance costs. The available sources do not measure how much each factor contributed to premium growth.

The largest single-year rise came in 2023, when the implied premium increased 13%, from $927 to $1,050.

Growth was not continuous. The figure rose in 2014, fell in 2015, then rose in each year from 2016 to 2023.

Not all of the increase reflected changes in the price of equivalent cover.

The share of combined home and contents policies in northern Australia that included flood cover rose from 50% in 2008-09 to 97% by 2018-19. Insurers moved to a standardised flood definition and made flood cover the default from 2011-12, meaning that some later policies provided broader cover than earlier policies.

Policies in the region with no flood cover fell from about 30,000 in 2008-09 to about 1,970 a year from 2014-15 onward.

Non-insurance rates across northern Australia in 2016:

• North Western Australia: 40% of properties, equivalent to about 10,700, the highest rate, up nine percentage points since 2011.
• Northern Territory: 26% of properties, equivalent to about 13,200.
• North Queensland: 17% of properties, equivalent to about 62,100, up seven percentage points since 2011.

More than 95% of uninsured households surveyed for the ACCC's inquiry identified cost as the reason for not holding home insurance.

Cyclone accounted for the largest share of claims costs in the region between 2008-09 and 2017-18, followed by storms, including hail. Water damage and flooding also ranked among the leading causes.

The ACCC also recorded the following for 2018-19:

• Retention rates for combined home and contents insurance were 94% in north Queensland, 87% in the Northern Territory and 83% in north Western Australia.
• Renewing customers paid 7% to 24% more than new customers for the same cover, a gap worth $255 in north Western Australia, $369 in north Queensland and $458 in the Northern Territory.
• Eight insurers supplied most home, contents and strata cover across the region, through around 30 brands and 119 intermediaries.

The highest readings in both series occurred in 2021–22: the gross loss ratio reached 93.2%, while reinsurance expense equalled 36.7% of gross earned premium.

Reinsurers may reimburse insurers for covered catastrophe claims. The price and structure of later reinsurance renewals then affect insurers' future costs.

Home insurance premiums reflect both local claims experience and broader reinsurance market conditions, but the available data does not quantify the contribution of each factor.

One insurer raised building insurance premiums by 70% for policies north of Mackay after the catastrophe claims of 2010-11. It made the change once an industry specialist it commissioned had reassessed the technical premium needed to cover cyclone costs in north Queensland.

A July 2024 Productivity Commission submission restated the Productivity Commission's 2023 recommendation to phase out the pool, referred to there as the Northern Australia Reinsurance Pool, over the medium term. The Commission identified two concerns:

• Government-backed reinsurance schemes risk subsidising the movement of people and property into higher-risk areas.
• The schemes expose the Commonwealth to a contingent liability that would not appear in the budget until a cyclone occurs.

Brisbane recorded the highest rate among the eight capital cities at 4.4%, followed by Melbourne at 3.9% and Hobart at 3.8%. Sydney recorded the lowest increase among the six cities with positive growth, at 2.6%.

Each of those readings is at least 12 percentage points below the 16.4% national rate recorded in the year to March 2024.

The measures in this article run from 2007-08, the ACCC's earliest premium comparison year, to February 2026. Most record higher costs at the end of their period than at the start. Contents insurance outside northern Australia, which fell 3% in real terms between 2007–08 and 2018–19, is the exception.

Insurance claims for storms and floods totalled more than $12.3 billion between January 2020 and November 2022, according to Insurance Council of Australia catastrophe data. That figure covers part of the insured cost of climate-related disasters.

None of the sources reviewed isolates how much of the premium growth is attributable to a single driver.

The following factors applied as cost pressures over the period covered, but their individual contributions are not quantified in the available data:

• Disaster claims
• Reinsurance costs
• Building-cost inflation
• Broader policy coverage including the increased inclusion of flood cover

The increase was uneven across Australia. The 178% real rise in northern Australia between 2007-08 and 2018-19 compares with 52% elsewhere, and the February 2026 city readings range from −2.2% to 4.4%.