Poorly located homes driving insurance rises

Many homes are being damaged multiple times - Newsreel
Suncorp CEO Steve Johnston has warned that many homes are being built in locations that are not sustainable. | Photo: Wollwerth (iStock)

A Queensland insurance leader has cautioned against putting homes in the wrong places in the rush to address supply and affordability issues.

Suncorp Group Chief Executive Steve Johnston said the “brutal fact” was that Queensland had for 100 years allowed houses in places where people should “never, ever have been allowed to build”.

He told the Queensland Futures Institute 2024 Finance Summit on Friday that these houses were now being hit regularly by natural disasters, and this could only get worse from the impacts of climate change in coming decades.

The situation would require more support for people to make their homes more resilient.

“You can get a subsidy for a solar panel but not for a roof to be battened down for a category four or five cyclones,” Mr Johnston said.

“We’ve got to get these planning laws right.

“My big concern particularly in Queensland is the rush to get housing into the market. We are going to just do again what we’ve done for the last 100 years, and we’ll have homes situated where they shouldn’t be.”

Mr Johnston said building home resilience was “a very big issue for our nation”. Governments had started putting hundreds of millions into this, but it would take billions to really protect people from what was ahead.

He said the poor location of so many houses was not the fault of any particular government but it could not be allowed to continue if insurance was to remain affordable.

The Prime Minister had recently described insurance as a “serial over-contributor to CPI creep”.

Normally insurance in the basket of Consumer Price Index (CPI) products accounted for about one percent of price growth but it was now at about eight percent.

“In the past re-insurers had put capital into Australia as a means of limiting risk,” Mr Johnston told the summit.

“They woke up to the fact that after five or six years of big losses Australia is quite a risky place to put their capital and they’ve reset their pricing.

“That’s gone from re-insurers to the primary insurers and that flows onto customers.”

To deal with the situation, insurance companies needed to contemporise their products and allow more tailoring to individual circumstances.

The Queensland Futures Institute Finance Summit
Speakers at the Queensland Futures Institute Finance Summit at the Hilton in Brisbane on Friday, May 31. | Photo: Supplied by QFI