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Bushfire inquiry sparks new insurance affordability debate

Insurers have pushed back against a leading consumer group’s assertion that climate change could make insurance unaffordable for many Australians.

The Insurance Council of Australia (ICA) argues that if governments act to mitigate risk then “no area of Australia should have unaffordable insurance”.

The Consumer Action Law Centre’s submission to the Royal Commission into National Natural Disaster Arrangements, also known as the bushfire royal commission, calls for an “urgent review” of insurance affordability in Australia.

“There’s a serious risk that home insurance could become unaffordable following the recent bushfire season, leaving many underinsured or not insured at all," CEO Gerard Brody says.

“Insurance promises to offer peace of mind. But with delayed claims, confusing policies that don’t always provide the expected coverage, and woeful responses to financial hardship by the insurance industry, we’re concerned that home insurance still isn’t working for many people.”

The centre says loss of income due to COVID-19 has compounded the problem, and its submission outlines 13 recommendations including:

  • a permanent insurance price monitor “to track and prevent price exploitation by insurers”
  • a standard definition of fire and a modernised standard cover regime “so that policies can be compared and understood”
  • outstanding Hayne royal commission reforms to be passed urgently
  • improved financial hardship responses by insurance companies.

ICA says its views on affordability are well known.

“No area of Australia should have unaffordable insurance,” spokesman Campbell Fuller told

“However, this requires governments to act urgently on known risks to communities, as well as changes to extreme weather exposure that are likely to occur due to climate change.

“ICA encourages consumer organisations to support its advocacy for the removal of unfair taxes and improvements to building codes, town planning and land use, especially in areas prone to natural disasters.

“These solutions deal with the real issues.”

ICA says its own submission will “provide insights into disaster preparation and management, the role of insurance and the impact that state taxation is having on levels of insurance in bushfire communities”.

However, it says it won’t publish the submission until the commission secretariat allows it, “following accepted practice and showing due courtesy to the royal commission”.