The Royal Automobile Association of South Australia (RAA) is calling for greater government investment in disaster mitigation and resilient housing, warning that without proactive measures, rising insurance costs could become unsustainable for many homeowners.
A recent RAA survey revealed that 80% of South Australians are concerned about the increasing frequency of natural disasters and their impact on housing. Additionally, 63% support increased funding for disaster mitigation efforts to address risks from bushfires and floods.
Growing Concerns Over Home Insurance Affordability
RAA CEO Nick Reade highlighted that climate-related disasters are placing a significant financial burden on homeowners, aligning with findings from the Actuaries Institute’s latest report on home insurance affordability.
According to the Actuaries Institute’s 2024 report, 1.6 million Australian households faced insurance affordability stress—a 30% increase from the previous year. The report also found that these households spend an average of 9.6 weeks of their gross income on home insurance, with 15% paying premiums exceeding one month’s gross annual income, up from 12% in the previous year.
Homeowners in high-risk areas, particularly those prone to floods and cyclones, have experienced insurance premium hikes exceeding 30%, significantly higher than the national average increase of 9%.
Reade stressed that the rising risk to properties is exacerbating the affordability crisis, not just in Australia but globally.
“Even before the [Los Angeles] bushfires, eight in 10 of our members were already concerned about climate-related disasters impacting their homes,” he said. “We must act now to prevent a situation where insurance becomes unaffordable or even inaccessible for some households.”
RAA’s Policy Recommendations for Disaster Resilience
To tackle these challenges, RAA is advocating for key policy changes aimed at improving disaster resilience and stabilizing insurance costs. The proposed measures include:
- Expanding the federal government’s $200 million Disaster Ready Fund into a long-term, indexed program.
- Redirecting revenue from the 11% tax on general insurance products toward disaster mitigation initiatives.
- Strengthening land-use planning regulations to prevent home construction in high-risk areas.
- Updating the National Construction Code to include resilience measures, with state-level adoption in South Australia.
Shifting the Focus From Recovery to Prevention
Reade emphasized the need for a greater focus on disaster prevention rather than recovery. He cited findings from the Productivity Commission, which revealed that 97% of disaster funding in Australia is allocated to recovery and clean-up efforts, while only 3% goes toward mitigation and resilience.
“We need greater investment in disaster mitigation infrastructure, better land-use planning, and more resilient housing,” he stated.
He also suggested that redirecting funds from insurance taxes toward disaster prevention could help stabilize premiums over time while reducing the risk of property damage.
“With over 825,000 members in South Australia, our survey shows that two-thirds of respondents want increased funding for mitigation efforts,” Reade concluded.
