Blanket solutions
A patchwork approach to improving home insurance affordability won’t cut it – we need a coherent response
By Ron Arnold, founder 11eight
The Actuaries Institute estimates about 15% of Australian households – 1.6 million homes – were under home insurance affordability stress as of March 2024. And the prudential regulator’s March 2026 Insurance Climate Vulnerability Assessment projects that figure will reach one in four homes by 2050 – the equivalent of about 40,000 additional households losing meaningful protection every year between now and then.
Home insurance affordability is a serious, complex and as yet unsolved public policy challenge. But it has not arrived overnight.
The home insurance affordability challenge has developed through a broader process – involving data, narrative, inquiry, framing, coalition-building and, eventually, institutional responses. This helps explain why some debates have remained talk while others have produced concrete interventions. Even so, none of those interventions, individually or together, yet amounts to a coherent long-term settlement.
This can be understood as an issue-to-institution cycle. It is not a neat linear sequence. The early phases have tended to run in parallel, but over time they have given shape to the policy tools and institutional reforms in place and now on the agenda. However, the cycle has not finished.
The parallel currents
The home insurance affordability challenge did not begin with a single turning point. It emerged from three currents running simultaneously, over a decade or so.
First, signals of stress accumulate: sharp premium increases, high excesses, underinsurance and widening gaps in availability.
On the industry side, address-based pricing, actuarial work, internal reporting, and deeper research and data on hazard, exposure, cost, capital and reinsurance.
Second, those signals are translated into stories. Media outlets profile households unable to afford cover, businesses facing dramatic premium jumps and communities struggling to get affordable cover.
Politicians, community advocates, councils and industry voices add their own interpretations, turning scattered experiences into a recognisable public narrative.
Third, governments and regulators respond through inquiries and reviews.
These collect data, invite submissions, compare markets, identify drivers and canvass options.
In doing so, they amplify signals, discipline stories and legitimise affordability as a formal policy concern.
From pressure to framing
I’ve sat in enough meetings, stakeholder forums and government engagements to know the same set of facts can yield completely different policy conclusions depending on how the room chooses to describe the problem.
So what has happened and is happening is a contest over framing.
Different actors have framed home insurance affordability differently, and the framing matters because it shapes the policy menu of responses.
- A climate and resilience frame points towards mitigation and hazard reduction.
- A land use and building standards frame focuses on where and how we build, and whether codes are calibrated to the future rather than past risk.
- A managed retreat and relocation frame goes further, asking whether some properties and communities should not be rebuilt in place at all – and who bears the cost of that transition.
- A mitigation incentives frame focuses on whether households and businesses can get clear, actionable guidance on what risk reduction measures are available to them, and whether insurers and government actually reward those actions through lower premiums or grants.
- A market design frame opens the door to structural interventions, including product and conduct reforms.
- A fairness and transparency frame supports clearer disclosures, comparison tools and better explanation of pricing outcomes.
- A data and risk transparency frame focuses on the absence of an agreed, accessible asset that maps hazard and risk consistently across the market – one that government, insurers, lenders, planners and communities can all draw on.
- A tax and funding frame highlights the role of duties and charges embedded in premium costs.
- A governance frame underlines the need for co-ordination across governments, regulators and sectors.
- A complaints frame points to the growing number of complaints and the need for better consumer protections and stronger enforcement and penalties.
Coalitions form around these frames. Consumer advocates, government departments, regulators, state councils, industry bodies, academics and actuaries each anchor the challenge in ways that support their preferred solutions. Once a frame stabilises, it tends to filter what counts as a legitimate response and what gets dismissed.
From proposals to programs
Less than a decade ago this challenge was still largely diagnostic. What’s different now is that the conversation has shifted from diagnosis to design.
Some remain contested proposals; others have crystallised into interventions and delivered solutions.
On the proposals side, the range is wide:
- A flood defence fund, proposed by the Insurance Council of Australia, covering new flood infrastructure, property upgrades and managed buybacks and relocations across the most exposed jurisdictions.
- A traffic light hazard disclosure model, floated by the Financial Services Minister, that would show households their exposure to key perils and require insurers to explain material premium increases.
- A broader flood reinsurance pool, modelled on the cyclone reinsurance pool and on international precedents reviewed during minister Daniel Mulino’s European delegation in 2025 – under consideration as part of the “full menu” of partnership options the government has flagged, though no timescale has been confirmed.
- A national housing resilience accord, called for in the Housing Resilience Action Plan 2030 – a cross-sector blueprint setting out a co-ordinated national program of actions linking physical resilience improvements to insurance affordability.
- Divestiture powers over insurers, raised by the federal opposition before the 2025 election, then withdrawn.
- TasInsure, proposed as a state-owned insurer in Tasmania, subsequently reshaped into a more limited market oversight function.
- Community mutual and council-backed insurance models for underserved regional markets, explored in areas where direct talks with insurers have produced no satisfactory outcome.
Against this, several “interventions” are now in place:
- The cyclone reinsurance pool, aiming to relieve price pressure in northern regions.
- The Disaster Ready Fund, supporting mitigation work. Calls persist for it to be better funded and extended longer term.
- Voluntary property buyback programs in flood-affected regions, targeting the most exposed properties and beginning to reshape settlement patterns.
- The bushfire resilience rating app, developed by the Resilient Building Council, allows households to self-assess their bushfire exposure and access insurance premium discounts from some insurers where their rating improves – the first working example of mitigation being directly rewarded in pricing at the household level.
These interventions matter not because any one is the answer, but because they show the challenge has moved beyond commentary.
And the questions, challenges and debates are now homing in on: how should risk be shared and priced? What role should the governments play? How can interventions be funded?
How should fairness and long-run sustainability be balanced? Which institutions are best placed to carry which risks?
In my view, what we are seeing is that the system is mid-cycle – beyond just recognising the problem, but well short of a deliberate long-term solution.
Where to from here?
The question is no longer whether more change is coming, but what form it takes.
On that question, one distinction matters more than any other: pricing is not the problem.
What rising premiums are doing is shining a light on risk that has been accumulating for decades – risk shaped by where we chose to build, how we built, what standards we applied, what infrastructure we invested in and how climate change has changed the lens. The price is the signal, not the source.
That matters because the temptation in this affordability challenge is to treat the signal as the problem and reach for regulation to suppress it.
The overseas evidence is instructive. In both California and Florida, attempts to manage affordability through price controls and rate caps drove private insurers out of the market, left state-backed insurers of last resort carrying enormous and growing exposures, and produced no reduction in the underlying risk.
The price was suppressed; the hazard was not. Dr Mulino has acknowledged as much, noting he is not predisposed to price caps given the consequences seen in California.
Australia is not California or Florida. But the dynamics are not unrelated, and the lesson is transferable: regulating price does not reduce the risk.
It obscures it, displaces it and ultimately makes the problem harder to resolve and perhaps even adds to it – for example, by encouraging building in the wrong places.
The real work is on the risk itself – through better land use decisions, stronger building standards, sustained investment in mitigation infrastructure, managed retreat where necessary, and a shared data asset that lets all participants see the same underlying picture and better pricing transparency and explainability.
To date, what is emerging is not a coherent long-term framework but a patchwork: hazard-specific responses in one place, location-based interventions in another, separate transparency and resilience measures elsewhere.
Each may be defensible on its own terms and bring value. Together, they risk becoming fragmented and unco-ordinated.
An integrated long-term approach would connect all the levers across hazards and geographies, involve all key stakeholders in a co-ordinated way, and price risk so that signals reach households, planners, lenders and governments in time to act.
That long-term integrated approach does not yet exist. What exists is a patchwork of responses. Some innovative, some necessary, none yet sufficient on their own. The issue-to-institution cycle will continue.
The only question is whether the next phase moves towards a coherent settlement or adds another layer to the patchwork.
