Climate change is impacting farm insurance and driving up premiums

Research by the Actuaries Institute released this week indicates that the median home insurance premiums are up 28% in the year to March 31, the biggest increase in 20 years. People in flood prone areas are facing price hikes of up to 50%.

The actuaries noted that part of the increase was due to higher building supply costs, but it was also “driven by climate change impacts we’re already seeing.”

This finding aligns with recent research commissioned by CHOICE, the Climate Council, Financial Counselling Australia, the Financial Rights Legal Centre, and the Tenants' Union of NSW, that has found that Australian homes are being left unprotected as insurance becomes unaffordable or unavailable for many.

This report, titled ‘Weathering the Storm: Insurance in a Changing Climate’ highlights that 87% of policyholders in Australia have seen insurance premiums rise, and two in five people reported having their homes impacted by an extreme weather event in the last five years.

"Two in five respondents to our national survey of home and contents insurance policyholders reported that they had been impacted by extreme weather events in the past five years, but our research found that the insurance market is failing to cover these events fairly and affordably. Many people are being forced to pay higher premiums, reduce their cover, or abandon insurance entirely," says CHOICE CEO Alan Kirkland.

Farmers for Climate Action, an organisation representing 8000 Australian farmers, says the rise in insurance premiums that’s resulted due to more frequent extreme weather events that have occurred in Australia have a direct correlation with climate inaction.

Ulmarra farmer Peter Lake says climate change has made floods on his northern New South Wales farm more frequent and severe, and made his farm insurance unaffordable.

“We’ve dealt with major floods in 2009, 2011, 2013, and 2021 but nothing could have prepared us for February 2022. We lost fences and fodder and were forced to sell most of our stock. Even when the waters receded, we were flood free but not mud free. We battled mud for months,” he said.