Home insurance rejection rate to rise
MORE people living in low-lying coastal areas and high-risk flood or bushfire areas can expect to be knocked back for home insurance, the Institute of Actuaries of Australia says.
The institute also said the cost of climate change-related insurance premiums increases to 2070 would be less than inflation rises over the next 57 years.
In a submission to a Senate inquiry examining extreme weather and climate change, the institute argued the trend of rising insurance premiums for high-risk properties would continue.
Under climate changes and in the absence of significant flood mitigation initiatives, the institute predicted more properties would become "uninsurable and unaffordable".
As part of mitigation efforts, the institute said the government should investigate how to help those most affected, particularly in flood-prone areas and low-lying coastal zones.
It also argued the government should offer financial subsidies for current home-owners to help transition to higher insurance premiums. The submission also backed the position of the Insurance Council of Australia, which found the rising premiums were a direct result of the risks involved.
Despite the rising cost of climate change for some home-owners looking for insurance, the institute said the biggest increase over more than 50 years would be inflation.
While inflation rises were generally offset by rises in wages, the institute said climate change would add an extra $1.5 billion a year to insurance industry costs.