Inquiry Hears Millions Face Uninsurable Future If Climate Change Not Dealt With

Australians could soon face a situation where homes and businesses are uninsurable and unmortgageable, as climate-driven disasters push premiums beyond reach.

Experts told a parliamentary inquiry the insurance system is nearing breaking point, with escalating risks from floods, fires, and storms leaving both insurers and households cornered.

Richard Dennis of The Australia Institute warned that worsening extreme weather is pushing insurance cover into dangerous territory.

He said policies may soon be priced so high that families and businesses cannot afford them, or insurers may withdraw entirely from high-risk markets.

The warning comes as the government’s first National Climate Risk Assessment shows 1.5 million Australians could be living with the direct impacts of rising seas by 2050. That number rises to more than three million by 2090 if global heating surpasses 3 degrees Celsius.

The Climate Council has identified 11 federal electorates at greatest risk of becoming “effectively uninsurable,” meaning premiums climbing so steeply they are out of reach, even if coverage technically exists.

NIBA’s head of policy and advocacy, Allyssa Hextell, said insurance collapses as a safety net once premiums rise beyond what households and businesses can pay.

“If risks rise too far, insurance collapses as a mechanism.”

When Insurers Walk Away

Experts explained that once cover becomes unaffordable or unavailable, the financial risks shift directly onto governments and individuals.

Treasury has already reported that extreme weather slowed Australia’s economy by $2.2 billion in the first half of 2025.

Northern Australia has already seen insurers pull out of cyclone-prone regions, forcing state governments to act as insurers of last resort.

Experts told the inquiry that without structural reform and major investment in resilience, taxpayers will be left carrying more of the burden.

Richard Klipin, CEO of NIBA, stressed that the costs don’t disappear when insurers exit—households, governments, or local communities would ultimately absorb the losses.

“Someone is going to pay,” he said.

Fewer Choices, Higher Risks

Insurance brokers said that the newly released climate risk data will be important in helping them guide clients.

Brokers now need to explain how risks are evolving and help households and businesses decide whether to insure or manage those risks differently.

Some insurers are already withdrawing from flood and fire cover, while others are still willing to take on limited exposure.

Klipin added that his organisation strongly supports proactive investment in mitigation and public access to clear climate risk information.

“These measures are not only fiscally responsible, but socially imperative. Without action, communities will face higher costs, reduced protection and slow recovery from climate disasters,” he said.

Fossil Fuel Claims Called a Sham

Experts also rejected government claims that Australia is transitioning away from fossil fuels. Dennis said the reality was the opposite, pointing to new coal and gas projects still being approved with taxpayer subsidies.

“We’re still getting into them,” he said.

He argued that fossil fuel companies are making private profits while leaving the clean-up bill for climate disasters to the public, estimated at $40 billion a year.

Dennis also compared the burden to other budget items, arguing people concerned about NDIS costs should be more worried about the greater price tag of climate damage.

As per the report, the economic cost is estimated to be staggering. Under a 1.5C scenario, floods, bushfires, storms, and cyclones could cost $40 billion a year by 2050. Property values could fall $611 billion by mid-century, and $770 billion by 2090.

Workforce productivity will also collapse under extreme heat. A 3C scenario could wipe out 2.7 million workdays every year.

Net Zero or Greenwash?

The experts also questioned whether Australia’s net zero strategy is credible.

Net zero allows emissions to continue if they’re offset with credits, which Dennis says masks ongoing fossil fuel use.

Pointing to Chevron, a petroleum refinery company, he said it is increasing emissions while generating credits it can sell to other polluters under the safeguard mechanism.

This allows the company to technically meet its net zero obligations even as its actual emissions rise.

“Now, if you’re comfortable with that, that’s okay, but that’s not science. The science says we have to lower the emissions and we need to plant a tree, not that you get to choose,” he said.