Why house insurance is so expensive in Australia in 2025-2026 is due to several factors driving premiums up 20% to 30% per year in last 3 years. First, natural disasters, Australia has high risk of bushfires, floods, cyclones, hailstorms and storms, with recent major events like 2022 floods costing $6B in claims, 2019-2020 bushfires $2.3B, and frequent hailstorms in Sydney and Brisbane causing $1B each, so insurers increase premiums to cover claims and reinsurance costs, which rose 30% globally. Second, rebuild costs increased 40% since 2020 due to building materials shortage, labour shortage and inflation, so average rebuild cost for 3-bed house rose from $300K to $500K, sum insured increases and premium follows. Third, reinsurance costs, Australian insurers buy reinsurance from global market, which increased due to climate change and global disasters, passing cost to customers. Fourth, location risk, houses in flood zones, bushfire prone areas and coastal cyclone areas pay 2x to 5x more, with some flood zone houses paying $5K to $10K per year versus $1,500 inland. Fifth, underinsurance and non-compliant building. Sixth, increased claims for water damage and theft. So average house insurance rose from $1,200 in 2020 to $2,200 in 2024. Factors like construction type, age and security also affect, but main driver is climate and rebuild inflation.
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