A coalition of organisations concerned about insurance affordability have put forward a plan to improve resilience in current housing stock and ensure mitigation measures are recognised through lower premiums.

The Housing Resilience Action Plan 2030 aims to align with and complement other proposed interventions including the Insurance Council of Australia’s call for a $30 billion Flood Defence Fund, disaster risk pools and targeted subsidies.

Housing resilience discussions often centre on ensuring new properties are not built in high-risk locations as the population expands and demand rises, but rising numbers of current homes cannot access affordable cover.

The action plan says failings in addressing that issue include lack of clear resilience pathways and advice for householders, and the absence of a transparent link between mitigation action and premiums. Co-ordinated rather than piecemeal responses are also required.

The plan, outlining 50 proposals across one-, three- and five-year time frames, was developed by Monash University, Financial Rights Legal Centre, Financial Counselling Victoria, the Resilient Building Council, Finity and ARC Justice. Its publication follows a December workshop attended by government, insurance, banking, investment, academia and community sector experts.

The central plank involves creating a national risk and resilience rating system (NRRRS) that would be recognised across the insurance, finance and building sectors and that could be rolled out quickly because it would build on Resilient Building Council ratings.

The plan calls for the federal government to convene a forum to strike a national housing resilience accord within six months, with the NRRRS as a key agenda item.

First-year proposals include that government funds a voluntary national rollout of the rating system and household assessments, while insurers would commit to including the ratings within premium setting and would provide better information to consumers on price drivers.

Over time, insurers would provide pricing information on a range of resilience ratings at the quotation stage and on renewal notices, with an independent price monitor established to ensure consistency and consumer trust. The ratings would eventually be integrated into the National Construction Code.

The plan also includes a strong focus on supporting community resilience infrastructure and engagement, as well as on market innovation.

It says the government should commit to an expanded Disaster Ready Fund budget and timeline to support further investment in infrastructure, including implementing ICA’s Flood Defence Fund.

Ultimately, governments should mandate use of the ratings across relevant grant and recovery programs such as the Disaster Ready Fund, Disaster Recovery Funding Arrangements and the Resilient Homes Fund, plus new grant and subsidised lending products.

The plan includes recommendations around consumer advice, building back better and product innovation.

In the medium term, insurers should roll out standard home building products that include the choice of build back better, it says. Government, insurers and consumer groups should explore multiyear home products that provide more pricing stability for households that spend on resilience.

Action to support parametric insurance – including group schemes held at local government level and products aimed at SMEs – should be developed to speed payouts when disaster thresholds are reached, it says.

The plan says it starts from the premise that legacy housing risk is a system problem, not a failure of individual households, and it’s an issue that is getting worse and exacerbating inequalities.

“Many high-risk locations, including flood-prone riverine communities, are increasingly home to lower-income households and first-time buyers priced out of safer markets,” it says.

“A large share of these dwellings are ‘legacy homes’: older properties built to standards that did not account for future climate risk or resilience.”

Short-term affordability can be improved through redistribution, but disaster losses, and the long-term affordability and sustainability of arrangements, depend on reducing underlying risk, it says.

The Actuaries Institute’s home insurance affordability index shows the proportion of households facing unaffordable cover climbed from 10% in 2022 to 15% in 2024, equivalent to 1.6 million homes.

Finity principal Sharanjit Paddam says no insurer, bank or government can turn the insurance affordability problem around in isolation.

“The system is highly interconnected, so when everyone moves in the same direction behind a shared framework, reducing risk and restoring affordable insurance becomes achievable,” he said.

“A national housing resilience accord, convened by the federal government this year, is the critical first step.”

The report is available here.