the financial risks of living close to nature are being priced
into every homeowner's annual renewal.
| Key Points |
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Golf-ball-sized hailstones shattered skylights in Weston Creek and stripped the bark from planes trees in Braddon.
Wind gusts of up to 116 kilometres per hour were recorded at Canberra Airport, and more than 3,150 homes lost power at the storm's peak.[2]
Within 24 hours, more than 15,000 insurance claims had been lodged from the ACT alone, prompting the Insurance Council of Australia to declare the event a national catastrophe, a designation that unlocks emergency claims-processing protocols.
The total insured loss from that single afternoon exceeded $320 million, with ACT claims accounting for 56 per cent of all claims lodged across ACT, New South Wales and Victoria combined.[2]
That storm was not a bushfire.
It was a hailstorm, a reminder that climate risk in the Australian Capital Territory is not one-dimensional, and that the financial consequences of an intensifying climate do not discriminate by suburb or income.
In the years since, the conversation about climate and insurance in Canberra has deepened, grown more urgent and for many homeowners more expensive.
A City Built in the Bush
Canberra earned its nickname, the bush capital, not merely as a point of civic pride but as a literal description of its geography.
The city was designed and built within a mosaic of grassland, open woodland and native forest, meaning its urban edges press directly against flammable vegetation.[3]
To the west and north, the Brindabella Mountains and Namadgi National Park form a vast forested hinterland from which the territory's most severe fire threats historically originate.
The 2003 bushfires, which burned approximately 164,000 hectares, killed four people, destroyed nearly 500 homes and remain seared into the collective memory of the city.[7]
Since then, no fire of comparable scale has struck the ACT's urban area, but the conditions that make such fires possible have grown more pronounced.
Between 2014–15 and 2018–19, the average and maximum Fire Danger Index across the ACT increased, and the number of days rated as very high fire danger climbed from 11 in 2014–15 to 44 in 2018–19.[7]
The 2018–19 bushfire season commenced in September and was extended through to the end of April — the longest fire season since 2003.[7]
A 2026 report from the Climate Council and Emergency Leaders for Climate Action identified Canberra as one of several major Australian cities whose expanding urban fringe now shares many of the characteristics that made the January 2025 Los Angeles fires so catastrophic.[8]
The city is growing outward, and the direction of that growth, principally westward, runs directly toward its greatest fire risk.
What the Premiums Reveal
National data from insurance analytics firm Finity, published in early 2026, shows that Canberra's average home insurance premium sits between approximately $2,042 and $2,622 per year, placing it among the lower end of capital city averages.[1]
Darwin recorded the highest average capital city premium at $4,015, followed by Sydney at $3,964 and Brisbane at $3,872, reflecting the disproportionate exposure of those cities to cyclone and flood.[1]
By the national aggregate measure, Canberra may appear insulated.
That appearance is misleading.
Nationally, the average home insurance premium rose from $1,940 in 2020 to $2,938 by October 2025, a 51 per cent increase in five years that outpaced general inflation and was driven by catastrophe losses, construction cost inflation and shifts in insurers' risk assessments.[1]
Premiums in bushfire-prone local government areas within Sydney, Melbourne and Perth increased by between 78 and 138 per cent since 2020, according to research cited by the Climate Council in January 2026.[8]
Canberra's western and southern fringe suburbs, those closest to the Brindabellas, the Cotter Catchment and parcels of the Canberra Nature Park, face analogous pressures, even if the ACT's relatively compact geography and lower population density have so far moderated the steepest rate rises.
Finity principal Stephen Lau has stated that premium pricing reflects the underlying risk that insurers face, noting that those in high-risk bushfire or flood areas are likely to be charged higher premiums because of the potential risk exposure of their property.[1]
For Canberra homeowners, that logic is now embedded in their annual renewal notice in ways it was not a decade ago.
The Geography of Risk
Not all Canberra suburbs face the same level of climate exposure, and insurers are increasingly pricing that distinction with granular precision.
Suburbs on the urban-bushland interface, including parts of Stromlo, Holder, Rivett, Chapman and suburbs adjoining the Canberra Nature Park, carry elevated bushfire exposure, owing to their proximity to large tracts of eucalypt forest and grassland.
Hailstorm risk, meanwhile, is geographically broader, with the January 2020 event demonstrating that Weston Creek, Woden, Tuggeranong, Belconnen and the inner south are all within the corridor where severe convective storms concentrate as warm, humid air from the coast meets cold air descending from the highlands.[2]
Flood risk, though less acute than in coastal cities, is not absent.
ACT Government flood mapping has identified properties near Sullivans Creek, Tuggeranong Creek, Yarralumla Creek and Weston Creek as lying in zones that would be inundated in a one-in-100-year flood event.[9]
In November 2025, the ACT Government received $400,000 in federal funding to install a new flood warning system in those high-risk creek catchments, signalling that authorities regard flash flooding as a growing hazard as climate-driven rainfall variability intensifies.[9]
Researchers from the University of Canberra's resilience studies found in their 2023 tracking survey that residents in Gungahlin, a rapidly expanding outer suburb with limited shade infrastructure and high exposure to urban heat, are among the territory's most climate-vulnerable communities.[10]
Younger people and renters were consistently identified as facing the greatest gaps in climate financial preparedness, including access to insurance.
Reinsurance and the Global Feedback Loop
The dynamics driving Canberra's premiums are not only local.
Reinsurers, the insurers of insurers, operating on global risk portfolios, have raised their prices substantially in response to a worldwide surge in catastrophe losses, and those costs are transmitted directly into Australian household premiums.[11]
In the six of seven years preceding 2025, insured natural catastrophe losses globally exceeded US$100 billion annually, a threshold that would have been extraordinary a decade ago but has become the new baseline.[5]
Aon's Head of Climate Analytics APAC, Dr Tom Mortlock, has described the situation facing the insurance sector as a "Catch-22": climate change is increasing the frequency of extreme weather events, which in some areas disproportionately affects vulnerable communities, while simultaneously pushing up the cost of the very insurance those communities need to recover.[12]
For Australian insurers, higher reinsurance attachment points, the threshold above which reinsurance coverage activates, mean they are absorbing more of the financial risk of each catastrophe before their reinsurance kicks in.
That exposure has been passed to policyholders through premium increases across retail home and contents lines.
Household insurance actually lost money for the Australian industry for four consecutive years preceding 2024, according to the Australian Prudential Regulation Authority, even as consumers absorbed rising premiums, a paradox that reveals how sharply catastrophe costs have outpaced pricing.[11]
How Insurers Model Canberra's Future
The Australian Prudential Regulation Authority, in collaboration with the Bureau of Meteorology, the Australian Climate Service and the CSIRO, has coordinated a landmark Insurance Climate Vulnerability Assessment with Australia's five largest general insurers, IAG, Suncorp, Allianz, QBE and Hollard, who collectively cover approximately 80 per cent of the general insurance market by premium written.[4]
The assessment asks those insurers to project home insurance affordability to 2050 under two climate scenarios: one in which current emissions policies are maintained and global warming reaches approximately 2.5°C by 2050, and one in which a delayed policy transition occurs from 2030 onward.[13]
Under the current policies scenario, the modelling finds that continuous and compounding physical damage from extreme weather events will divert capital away from productive investment, compress household incomes and deepen the affordability crisis for insurance.[13]
APRA's granular SA2-level modelling, a standard geographic classification roughly equivalent to a suburb cluster, means insurers are developing risk profiles that distinguish between areas like Tuggeranong in the territory's south and Belconnen in the north-west, which face different combinations of heat, fire and storm risk.[13]
For the ACT specifically, bushfire exposure from the western ranges and hailstorm frequency from convective storm corridors represent the two dominant climate perils that insurers are weighting in their forward models.
An emerging concern in the modelling literature is the treatment of cascading and compounding events, sequences in which a bushfire is followed by heavy rainfall, destabilising fire-scarred slopes and triggering debris flows, which current actuarial models do not yet adequately capture.[12]
Policy, Planning and the Regulatory Frame
The ACT Government declared a climate emergency in May 2019 and has since built one of the most comprehensive suites of climate policy of any Australian jurisdiction.
The ACT Climate Change Strategy 2019–2025 established emissions reduction targets and adaptation priorities, and a successor strategy covering 2026–35 is currently in public consultation, with the stated aim of achieving a net-zero, climate-resilient city by 2045.[6]
The 2023 Territory Plan and Planning Act 2023 introduced climate-ready planning reforms, including strengthened tree canopy provisions and requirements for new developments to incorporate climate-wise landscaping.[14]
Canberra's Living Infrastructure Plan set an ambitious target of 30 per cent tree canopy cover or equivalent across the urban footprint by 2045, with the explicit goal of reducing urban heat and improving stormwater retention during extreme rainfall events.[14]
A 2022 Climate Change Risk Assessment for the ACT was released to help the government prioritise adaptation and resilience investment, though the ACT's Select Committee on Estimates noted in 2023–24 that there was not yet a comprehensive single climate mitigation or adaptation framework governing government assets.[15]
One regulatory advantage the ACT holds over other states is the absence of stamp duty on insurance — a tax charged by every other state and territory, which adds nine to eleven per cent to premiums nationally.[16]
For ACT policyholders, that exemption provides a modest structural buffer against the premium increases being driven by climate risk, though it does not address the underlying hazard.
At the federal level, the government's Hazards Insurance Partnership facilitates data-sharing between the insurance industry and government agencies to improve understanding of affordability, underinsurance and non-insurance patterns, with the ACT contributing to that framework as a territory government.[16]
Who Bears the Burden
Across Australia, the distributional consequences of rising insurance costs are becoming clearer and more troubling.
A YouGov survey commissioned by the Climate Council in January 2026 found that 54 per cent of insured respondents were concerned that bushfires, floods and severe storms could make home insurance unaffordable or unavailable in their area.[1]
Almost half of respondents, 46 per cent, said their premiums had already increased due to extreme weather, and 22 per cent said they might consider going without insurance if prices continued to rise alongside climate-related risks.[1]
According to the Australian Bureau of Statistics, 1.8 million Australian households already hold no home insurance, a figure that climate analysts expect to rise as premiums climb.[17]
In Canberra, renters and low-income households, groups identified by University of Canberra researchers as having low climate resilience, face particular difficulty, as their capacity to invest in risk-mitigation measures such as ember-proofing or bushfire-rated shutters is constrained by tenure arrangements and financial resources.[10]
A paper from the Practical Justice Initiative at UNSW warned that without intervention, rising premiums could trigger localised property market instability, with insurers refusing to cover particular postcodes, a "postcode ban" scenario that would sharply reduce property values in affected areas and create pockets of concentrated disadvantage.[18]
The ACT's relatively high average incomes and educated workforce may insulate more residents than in equivalent regional areas, but the territory's rapidly growing outer suburbs, where younger and lower-income households are increasingly concentrated, represent a widening area of vulnerability.
Building Resilience, Reducing Risk
The insurance industry has begun to move beyond simply pricing risk and toward incentivising its reduction.
Under a scheme known as the Resilient Building Council (RBC) certificate program, homeowners who make verified bushfire-hardening improvements, such as ember screens, fire-rated eaves, sealed sub-floor vents and the clearing of combustible materials within 10 metres of the structure, can present the certificate to their insurer and negotiate a premium reduction.
One Canberra-area homeowner, Paul Cameron, described to the Insurance Business media outlet how submitting photographs to the RBC and obtaining a certificate resulted in a reduction of approximately $500 in his annual premium, a meaningful sum, even if it does not fully offset the underlying premium trajectory.[1]
The ACT's Emergency Services Agency runs the Strategic Bushfire Management Plan 2019–2024, which prioritises prescribed burns to reduce fuel loads in the peri-urban areas surrounding the city, and the Regional Fire Management Plan 2019–2029, which governs fuel management on land administered by the Environment, Planning and Sustainable Development Directorate.[19]
There is growing recognition that prescribed burning, while reducing fire risk, itself generates greenhouse gas emissions, creating a tension that future policy will need to resolve with greater transparency.[19]
The Insurance Council of Australia has argued that strengthening the National Construction Code (NCC) to require higher minimum resilience standards for new buildings could save an estimated $4 billion per year nationally, and has advocated that building standards be updated to reflect the bushfire and storm exposure that future climate scenarios project for areas like Canberra's western fringe.[16]
New Financial Models for a Riskier Future
For policy analysts and insurers alike, the long-term question is not merely how to price the risk Canberra faces but how to ensure that the financial mechanisms which enable recovery remain available to all residents, not only those who can afford a rising annual premium.
UNSW researchers have proposed a Medicare-style national model for bushfire insurance, arguing that Australia can no longer sustain a purely market-based approach as climate risk concentrates unevenly across geographies and income groups.[18]
Other models discussed in the Senate committee inquiry into climate risk and insurance premiums include public-private risk pools, resilience bonds and expanded government-backed reinsurance facilities similar to the existing Australian Reinsurance Pool Corporation model for cyclone risk, which could be broadened to encompass bushfire exposure in high-risk territories like the ACT.[16]
Australia's mandatory climate reporting regime, legislated in September 2024, will require large insurers to disclose climate-related risks and opportunities under a phased approach, creating a more transparent information environment for policyholders seeking to understand how their premiums are derived from climate risk assessments.[5]
For ACT policyholders, consumer protection currently operates through the Australian Financial Complaints Authority, which provides a dispute resolution pathway for those who believe their insurance claims have been unfairly handled, though there is no dedicated mechanism to address the structural unaffordability that escalating premiums represent for lower-income residents.[5]
Looking Toward 2035 and 2050
The picture that emerges from the modelling literature is not one of linear, gradual change.
It is one of accelerating risk, compressed timeframes and compounding consequences.
By 2050, the costs of climate-related extreme weather events across Australia are projected to reach $35.2 billion annually, nearly nine times the current estimated annual cost of $4 billion.[5]
UNSW researchers predict that more than 445,000 Australian homes will become uninsurable within 30 years under current climate trajectories, rising to 718,000 by 2100.[18]
For Canberra specifically, CSIRO and Bureau of Meteorology projections point to a warming and drying trend, with increased frequency and severity of very high and extreme fire danger days, longer fire seasons extending into spring and autumn, and more intense convective rainfall events producing flash flooding in creek catchments already identified as high risk.[15]
The population of the ACT is expected to reach more than 600,000 by 2050, meaning more people will be living at the urban-bushland interface that defines the city's greatest climate exposure.[14]
Under a high-emissions scenario, APRA's assessment suggests that communities exposed to floods, fires and heat stress face being priced out of the insurance market entirely before mid-century, a prospect that would fundamentally alter the social and economic fabric of affected neighbourhoods.[13]
Conclusion: The Cost of Living in the Bush Capital
There is something clarifying about how insurance prices risk.
It does not traffic in political debate or ideological reservation.
It works from data, from models, from the accumulated evidence of what has been lost before and what may be lost again.
In Canberra, that evidence increasingly points in one direction.
The city's character, its eucalypt-lined streets, its grassland reserves, its suburbs pressed against forested hills, is inseparable from the risk profile that climate science is now quantifying with growing precision.
The January 2020 hailstorm cost the industry hundreds of millions of dollars in a single afternoon.
The 2003 bushfires, which originated from the same western ranges that still define the city's greatest fire threat, demonstrated what an urban-interface fire can cost in human and financial terms.
What has changed is not merely the frequency and severity of such events, but the certainty with which scientists, regulators and insurers now project their escalation.
The ACT Government's investment in adaptation, from living infrastructure to updated planning codes to prescribed burn programs, provides a meaningful foundation, but it cannot, on its own, neutralise the physical risks that a warming global climate is compounding with each passing decade.
For homeowners in Canberra's western suburbs, for renters in Gungahlin, for small business owners in Woden Valley, the rising cost of insurance is not an abstraction.
It is a number that appears on a renewal notice and demands a decision: pay it, reduce coverage, or take the gamble of going without.
In a city built within the bush, that gamble carries consequences the 2003 fires have already made painfully clear.
If the trajectory of premiums, perils and policy continues as projected, the financial cost of calling Canberra home will rise well before 2035, and the question of who can afford to remain will become one of the territory's defining social challenges of the coming generation.
References- Insurance Business Australia — "Australian home insurance premiums climb 51% in five years," February 2026. Includes Finity data on capital city premium ranges and consumer survey findings.
- The Canberra Times — "Canberra storm declared a catastrophe with thousands of claims made," January 2020.
- ACT Emergency Services Agency — Bushfires information page. Describes Canberra's urban-bushland interface and western fire threat.
- Australian Prudential Regulation Authority — Insurance Climate Vulnerability Assessment overview, 2024.
- Insurance Council of Australia — Climate Action page. Includes projections of extreme weather costs to 2050 and disclosure regime details.
- ACT Government Climate Choices — ACT Climate Change Strategy 2026–35 consultation page.
- ACT State of the Environment 2019 — Fire section. Data on fire seasons, Fire Danger Index and prescribed burns.
- Region Canberra — "What the ACT needs to do to keep inevitable LA-style fire threat at bay," January 2026. Covers Climate Council and Emergency Leaders for Climate Action report.
- The Canberra Times — "ACT to receive $400k for new flood warning system," November 2025.
- University of Canberra — "Living well in a changing climate." Research on climate resilience tracking across ACT communities, 2023.
- APRA — Speech by Executive Board Member Suzanne Smith to Insurance Council of Australia Annual Conference. Discusses reinsurance pressures and household insurance profitability.
- UNSW BusinessThink — "Climate risk and insurance affordability in Australia," January 2026.
- Insurance Business Australia — "Climate costs set to shake the insurance sector, APRA report finds." Covers Oxford Economics modelling for the APRA Insurance CVA.
- ACT Government — Canberra's Living Infrastructure Plan: Cooling the City. Details tree canopy targets and planning reforms.
- ACT State of the Environment 2023 — Climate Change section. Includes 2022 Climate Change Risk Assessment and commentary on adaptation framework gaps.
- Insurance Council of Australia — Submission to the Senate Committee Inquiry on the Impact of Climate Risk on Insurance Premiums and Availability, July 2024.
- The Canberra Times — "How climate change is contributing to soaring insurance costs," July 2020. References ABS data on uninsured households.
- The Canberra Times — "Bushfires: Climate change risk sparks call for Medicare-like model of insurance," May 2020. UNSW Practical Justice Initiative research.
- ACT State of the Environment 2023 — Fire section. Details the Strategic Bushfire Management Plan 2019–2024 and prescribed burn policy.