UN chief urges divided nations to approve blueprint to address global challenges from climate to AI
US Senate committee questions tech executives about election threats
Britain needs finance sector strategy to tap foreign billions, report says
Kim calls for bolstering nuclear and conventional weapons after testing 2 types of missiles
Colombia government suspends peace talks with ELN rebels
Sudan's warring parties say they are open for peaceful solutions
Dollar rebounds after Fed goes big on rate cut
New Zealand economy contracts in second quarter, leaving room for rate cuts
Judge dismisses an assault lawsuit against Knicks owner James Dolan and Harvey Weinstein
Eli Manning leads group of 1st time nominees for Pro Football Hall of Fame
Brewers outperform preseason expectations again to win third NL Central title in four years
SYDNEY (Reuters) - Home insurance is becoming unaffordable for a growing number of Australian households as increased climate threats drive up their premiums, potentially putting billions of dollars in mortgage loans at risk, a report said on Monday.
As of March 2024, 15% of Australian households were experiencing home insurance affordability stress, which is defined as having premiums that cost more than four weeks' of their incomes, the report from the Actuaries Institute found.
That is equivalent to 1.61 million households, compared to 1.24 million found to be facing affordability stress a year ago – an increase of 30%.
Rising insurance costs have fuelled inflation in Australia and there are signs that some homeowners can no longer afford to protect their homes due to climate-related risks and high construction costs.
"Unfortunately, we expect this will continue because of the overall increasing risk of natural disasters associated with climate change, which will continue to put upward pressure on premiums," said the report's lead author Sharanjit Paddam.
The report estimated that 5% of Australian households with home loans were experiencing extreme pressures, with their insurance premiums averaging A$5,216 ($3,505) a year, more than double the average of A$2,124.
Those households facing the most extreme affordability stress have about A$57 billion in outstanding mortgage loans as of March, representing 3% of all home loan assets, it said.
"If their home is damaged by a natural disaster and they either don't have insurance or are underinsured, they could find themselves in a stressful financial situation," Paddam said.
"So, this is potentially a problem that's bigger than just insurance. It's also a problem for lenders, regulators and governments."
The report estimated that due to heightened risks of floods and cyclones, half of households in southwestern Queensland, the Northern Rivers region of New South Wales and regional Western Australia faced premiums that cost more than one month's income.
($1 = 1.4883 Australian dollars)
(Reporting by Stella Qiu; Editing by Helen Popper)
