See how Brisbane insurance premiums have soared in your suburb

The accelerating risk of climate disasters is hitting Brisbane home owners the hardest, with residents paying more to insure their homes than those in Sydney and Melbourne.

Residents in Brisbane’s flood-prone inner and western suburbs are bearing the brunt of soaring insurance costs, partly due to a process called “risk-based pricing”, whereby insurers pass on their “reinsurance” costs to home owners.

The average cost of residential building insurance across Greater Brisbane is $3779 a year, 78 per cent higher than in 2020.

The most expensive suburbs to insure a home include Balmoral, Bulimba, Hawthorne, Morningside, West End, Kangaroo Point and New Farm, where residents are forking out an average of $8112 a year.

They are followed closely by homes in the city’s flood-prone western suburbs, including Corinda, Sherwood, Graceville, Chelmer and Indooroopilly, where the average annual premium is $7982.

By comparison, the highest average premium in Sydney is $7033 a year in the Hawkesbury region, while in Melbourne, residents in the leafy Yarra Ranges pay $4481.

“We do see higher-than-average premiums in Brisbane compared to the rest of Australia,” said Stephen Lau, principal of actuary and insurance consultants Finity.

“It’s probably one of the highest flood-risk areas of Australia ... and it’s also one of the highest storm-risk areas.”

Data compiled exclusively for this masthead by Finity shows residents in the River City are paying for the impact of climate change through higher premiums. But they are also being hit with rising construction costs.

Lau said the highest premium increases occurred in the 2023-24 financial year, largely generated by higher reinsurance costs due to the 2022 floods – the second most expensive catastrophe in Australia over the past 50 years.

Insurance companies take out reinsurance to mitigate their own risk of extreme natural disasters. Figures from global insurer Swiss Re Group show reinsurance costs went up 30 per cent for the Australian market last year.

Insurance companies pass on the reinsurance cost to individual policy-holders, in what is called “risk-based pricing”.

“What insurers have to do is allocate their reinsurance costs down to the pricing in different areas,” Lau said.

“Usually the areas that are at most risk of [natural disasters] … get a higher allocation of reinsurance costs.”

Lau said Brisbane home owners were also hit with the “double whammy” of general inflation and rising construction costs, which drove up the price of rebuilding damaged homes.

Five years ago, it cost an average of $1878 to insure a home in Kenmore, Fig Tree Pocket, Brookfield, Moggill and Anstead. That cost has since soared more than 125 per cent to an average of $3632.

“There are a lot of properties that have very significant premiums, and insurers are pricing very granularly, at address level,” Lau said.

The cheapest average annual home insurance is $2348 in Caboolture, but that is still 96 per cent higher than five years ago.

Brisbane City Council will release new flood maps, affecting more than 17,000 properties, next month, but Lau said it was too early to determine how they would affect insurance premiums.

“We do need to know the depth of the flooding. Is it 10 centimetres of flooding ... or is it two metres of flooding? Those [levels] are very big drivers of premiums,” he said.

The higher their premiums, the more likely people will be underinsured, or choose to forgo home insurance entirely, insurance analyst Mark Tomlins said.

“The other thing they can do is they can choose not to insure for particular risks, so they might exclude floods. That just becomes sort of a hit-and-miss ... it really becomes a game of chance,” Tomlins said.

Insurance Council of Australia chief executive Andrew Hall has previously called for a 10-year, $30 billion flood defence fund that would be jointly funded by federal and state governments to develop flood defences, retrofit homes, and relocate people where no other mitigation was possible.

“The cost of extreme weather is growing,” Hall said.

“Over the past five years, the annual average insured cost of extreme weather has reached $4.5 billion [nationwide] – 64 per cent higher than the previous five-year average.

“This trend is expected to worsen, which is why we must invest in risk reduction, mitigation and adaptation.”

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