Q&A: How does climate change affect insurance costs and infrastructure resilience in high-risk regions like northern NSW or Queensland? - Lethal Heating Editor BDA

Key Points
Climate extremes are inflating insurance premiums Thousands are dropping coverage due to affordability Critical infrastructure is increasingly exposed Government interventions remain reactive, not strategic Queensland, Northern Rivers face compounding risks

Climate change is pricing Australians out of protection.

In cyclone-prone Queensland and flood-hit parts of northern NSW, insurance premiums have soared by more than 300% in the past decade.

Some households now pay over $10,000 a year for basic home insurance, while others have been refused cover altogether.

As the climate crisis fuels more destructive storms, floods, and fires, traditional models of risk assessment are breaking down.

Insurers are pulling out of the worst-affected areas, leaving entire communities without financial safety nets when disaster strikes.

“Uninsurable” Zones Are Growing

A 2022 report by the Actuaries Institute warned that 1 in 25 Australian properties, over 520,000 homes, will be effectively uninsurable by 2030 due to extreme weather risk¹.

The hardest-hit areas are low-lying, flood-prone regions in northern NSW (like Lismore) and coastal Queensland (including Cairns, Townsville, and the Whitsundays).

These same places were devastated by floods in 2022, causing $5.65 billion in insured losses, the costliest flood disaster in Australian history².

With risks rising faster than mitigation, insurers are either charging exorbitant premiums or withdrawing entirely.

Infrastructure at Breaking Point

Beyond households, climate extremes are also exposing the fragility of critical infrastructure.

Bridges, roads, power grids, and water systems were never designed for the new normal of back-to-back cyclones, record-breaking floods, and simultaneous bushfires.

In 2022, floodwaters isolated entire towns in northern NSW for days, cutting off essential services and delaying emergency response³.

The Insurance Council of Australia has warned that infrastructure failure can amplify loss, as happened when Lismore’s levees failed, catching residents off guard.

Government Response Falling Short

In response to the growing crisis, the federal government established the Cyclone Reinsurance Pool in 2022, aimed at reducing premiums for high-risk regions.

But critics say the scheme only addresses part of the problem, mainly cyclones, not floods or fire, and does little to incentivise resilience upgrades⁴.

Meanwhile, the $200 million Disaster Ready Fund is spread thin across the entire country, leaving local councils scrambling to adapt infrastructure with limited resources.

There is growing pressure for a national adaptation strategy that hardens both homes and public assets against foreseeable climate threats.

Abandonment by Degrees

In the absence of affordable insurance or resilient infrastructure, some communities are being forced to consider managed retreat.

The 2022 Northern Rivers Reconstruction Corporation has flagged the relocation of hundreds of homes from the most vulnerable floodplains, though residents remain divided.

Without urgent action, climate change could make entire regions economically and physically unsustainable.

Australia faces a stark choice: invest in resilience now, or pay ever-higher costs in catastrophe recovery and lost livelihoods.

Footnotes

• 1. Actuaries Institute (2022). Home Insurance Affordability and Socioeconomic Equity in a Changing Climate.
• 2. Insurance Council of Australia (2023). 2022 Extreme Weather Catastrophes Report.
• 3. ABC News (2022). Lismore Floods: Infrastructure failures worsen catastrophe.
• 4. The Guardian (2023). Critics say cyclone reinsurance pool fails to address climate risk broadly.

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