APRA Warning is an Alarming Wake Up Call to Combat Underinsurance and Climate Risk

The National Insurance Brokers Association (NIBA) is calling for coordinated action on climate resilience and disaster mitigation following alarming new findings from the Australian Prudential Regulation Authority (APRA) that point to a deepening home insurance protection gap across Australia.

APRA’s Mind the Gap: Insurance Climate Vulnerability Assessment found around 1 in 7 Australian households are uninsured today. But this could rise to around 1 in 4 by 2050, equivalent to an additional 1 million households without home insurance protection.

APRA’s assessment shows the pressure is being driven by both worsening physical risk and broader climate-related economic impacts. In the higher physical risk scenario, expected annual weather losses across all homes rise from less than $7 billion to more than $16 billion by 2050, while regional and rural communities are expected to be hit hardest as affordability pressures intensify in areas already facing lower insurance coverage.

For the insurance broking profession, this issue is at heart of protecting Australian households and businesses. Insurance accessibility and affordability are fundamental to community resilience, and any drift toward widespread underinsurance or homes becoming effectively uninsurable must be treated as a national policy priority.

NIBA CEO Richard Klipin said the APRA findings is a clear wake-up call.

“APRA’s report underscores what brokers have been experiencing on the ground. Climate risk is already putting pressure on affordability, increasing underinsurance, and threatening the ability of too many Australians to protect their home,” Richard said.

“If we do not invest now in resilience, mitigation and smarter long-term planning, we risk sleepwalking into a future where more households are left exposed and more communities become harder to insure. That is bad for consumers, bad for recovery, and bad for Australia’s economic resilience,” Richard added.

APRA’s findings reinforce NIBA’s recommendations put forward in its 2026–27 Pre-Budget Submission. NIBA has called for the Disaster Ready Fund to be expanded and indexed as a rolling ten-year program, alongside the introduction of a national co-funded household mitigation scheme to help homeowners in high-risk areas strengthen their properties against cyclones, bushfires and floods.

NIBA has also made a case for targeted household resilience measures, particularly in communities where large-scale mitigation projects may be less effective on their own. Affordability pressures are also being compounded by taxes and levies on insurance. Stamp duty, emergency services levies and GST can add up to 70% to premiums, creating a structural barrier to adequate cover and contributing directly to underinsurance and non-insurance.

The sector is united on the need for stronger action in this area. Recent calls from the Insurance Council of Australia (ICA) have also emphasised that APRA’s findings confirm urgent investment and action is needed to protect communities from the escalating impact of extreme weather.

“The answer cannot be to wait until after the next disaster and rebuild again at greater cost. We need coordinated action that reduces risk before disaster strikes,” said NIBA President Nick Cook.

NIBA looks forward to working with all levels of government, industry and key stakeholders to strengthen disaster resilience and help ensure Australian households, businesses and communities have access to affordable insurance and professional risk advice from the broking profession.