The prudential regulator says home insurance affordability is still a “problematic area” despite a recent moderation in reinsurance costs.

“It will remain challenging, and there are a number of factors that feed into that, not just reinsurance costs,” Australian Prudential Regulation Authority chair John Lonsdale said this morning.

“We are working closely with not just the insurers, but other agencies, the government side and the private sector to make sure those sorts of issues around affordability can be improved.”

He says APRA spends a lot of time collecting data and highlighting the matter for policymakers, but “it’s a very difficult set of issues. It’s a particularly problematic area, insurance affordability ... many players involved with no easy answers.”

The prudential regulator’s 2025-26 corporate plan, released today, says promoting access to affordable reinsurance is a priority for the next four years.

“APRA is currently consulting with general insurers on ways to maintain access to affordable and appropriate reinsurance in the face of rising global costs. APRA will release further details on its proposals in the first half of 2025-26,” the authority said.

The consultation builds on an announcement last year that APRA is considering changes to its reinsurance framework to increase insurers’ access to alternative protection options such as catastrophe bonds.

The regulator plans to release its insurance industry climate vulnerability assessment in the second of 2025-26.

“This assessment has involved Australia’s five largest general insurers and has included detailed analysis of granular, modelled premium data,” APRA said.

“The findings will provide governments, insurers, policyholders and the broader community with a clearer understanding of how general insurance affordability may evolve over the medium term in response to the physical and transition risks associated with climate change.”