Queensland floodwaters surround homes in 2025. Picture: NewsWire/Adam Head.
Australians are sick of paying rising insurance premiums to support those living in flood-prone areas, with two thirds now either unwilling or unsure about doing so.
Instead the nation’s property owners want to fight floods with pre-emptive measures and block development in regions that have elevated risk of inundation, putting a new demand on local, state and federal governments to overhaul planning — and bankroll defenses.
New research by insurance firm Youi, that surveyed more than 1200 people around the country, has revealed the preferred option for supporting those in flood-risk areas via increased premium costs was to not subsidise them at all.
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A whopping 52 per cent of South Australians would prefer to pay no extra cost in their insurance, followed by Western Australians at 50.9 per cent, Queenslanders, 49 per cent, Tasmanians at 43.5 per cent, Victorians at 43.2 per cent, and those in NSW, 42.5 per cent.
Add in those unsure of the best approach and it hits 66 per cent nationally.
The report identified more than two million Aussie homes as being flood-prone.
Among those willing to support people living in flood-risk areas, most topped out at $300 being added to their own premiums.
The number one priority for managing flood risk across the country was to restrict development in flood zones, followed by improving flood defences and infrastructure.
But the revelation so many do not want to have their own bills underwrite risks for others could have significant ramifications for the availability of insurance in some areas.
In 2011 Victorian residents of the town of Mystic Park built informal flood defences out of earthern walls that protected their homes. Formally engineered solutions could deliver even better protections.
How much each state and territory wants to support insurance premiums for those in flood areas. Source: Youi.
Youi chief executive Nathaniel Simpson said it was important to note that the way insurance worked was that a wider pool of people meant minimised costs for as many people as possible, with even those insured and living in flood-risk areas also helping to off-set costs for storm risks in other areas.
While the responses could be read as indicating Australians didn’t want to support those in at-risk areas, but said he believed the overarching desire to take action to fight floods before they impacted homes showed there was still a strong sense of Aussie mateship present.
“The Australian spirit is generous and inclusive and we rally around each other, so that answer, in the context of the other answers … the message to me is that while we have the opportunity to direct what we can to solving the underlying problem, to do that rather than increasing premium costs,” Mr Simpson said.
“But while the risk remains, it will be paid by someone, and they don’t want to see that perpetuated and to instead see the underlying issue addressed, rather than having to spend more and more on clean up after the fact.”
He added that this reflected the position of the nation’s insurers, who wanted to find ways to reduce risks, and if possible provide policies more widely and more affordably.
A Queensland house inundated by flood waters a number of years ago.
How different parts of Australia believe development around flood zones should be treated. Source: Youi.
However he said this would take a co-ordinated effort across federal, state and local governments and for the nations politicians to stop treating flood preparedness as a political point, and for it to have a unified response.
Independent economist and climate councillor with the Climate Council Nicki Hutley said the high numbers not wanting to support others’ insurance premiums was both a sign of naivety in how insurance worked, but also a “really distressing” attitude.
“It’s a bit sad if that’s where we are,” Ms Hutley said.
While rising building costs and insurance claim events were combining at present in a way that hadn’t happened historically to drive up premiums more substantively, she said the reality was that separating insurance pools to remove those with heightened risks would likely leave them without insurance.
“There are some areas where it is already not available, or too expensive, so the market is already getting there anyway,” Ms Hutley said.
“But there’s always a cost somewhere, and it will be up to tax payers if the government is left with the clean up bill.”
Insurance firm Youi chief executive Nathaniel Simpson believes Australians want to see a change in the way we address flood risk — they want to fight it rather than clean up after.
What people in each state and territory want done to treat flood risk. Source: Youi.
However, the economist said it appeared many were taking the right view towards reducing costs by reducing risks. While this was complicated at a climate level, she said having Infrastructure Australia audit the parts of the country where levees and other systems could help minimise risks could “hopefully bring down premium costs” with defensive structures.
She also advocated better home design to ensure residences were positioned better to withstand flooding.
“You can’t prevent all risk, but there are some areas you shouldn’t be building there in the first place,” Ms Hutley said.
Mr Simpson noted that better thinking about how some areas were developed could still potentially lead to more land development in areas with some element of flood risk, but without leading to that risk being eventuated.
“But that is more cost effective if you do it before you put the housing in,” he said.
Mr Simpson added that housing affordability needed to be looked at as a wholistic matter, accounting for live-in costs, not just the price of the mortgage — and that better financial literacy among Australians would potentially help many anticipate insurance premiums so they were not seen as a surprise, and ideally factored into their home purchasing decisions.
The insurance agency is also releasing a series of practical resources that Australians can use to help give their home the best change of coping with a flooding event.
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