Analysis from the Actuaries Institute has illustrated the severity of Australia's insurance affordability crisis, with the median home premium experiencing its biggest jump in two decades.
In the 12 months to March, home insurance premiums surged 28 per cent.
Insurers have been pushing up prices for a few reasons - the cost of building work has surged because of supply chain shortages and climate change is fuelling more frequent natural disasters and jacking up reinsurance costs.
Costs have been rising for everyone but covering the risk of floods has become particularly expensive, with low-income households most likely to be living in these areas and shouldering the burden.
Finity Consulting actuary Sharanjit Paddam said insurance would get less affordable because of climate change and leave more households with no other choice but to go without.
"Without insurance, households will struggle to recover from disasters and governments, taxpayers, charities and many informal means of support will be left to assist," Mr Paddam warned.
He said households would unlikely be able to make a full economic recovery without it.
The issue of insurance affordability is on the federal government's radar, with Financial Services Minister Stephen Jones launching an investigation into the matter in the context of devastating floods in 2022.
Consumer group CHOICE last week released a list of recommendations to protect customers at risk of being priced out of insurance entirely.
The actuaries body weighed in with its own suggestions to the escalating problem, including replacing insurance taxes with fairer and more efficient methods of raising revenue.
The risk experts also recommended targeted, means-tested subsidies in recognition that low income households are likely to be hardest hit.
An insurance or reinsurance pool for riverine flooding could also be considered.
"If the government was to give consideration to an insurance pool, any future model would need to consider the fact that flood risk is highly localised in Australia among a relatively small number of households with significant exposure," Swiss Re actuary Evelyn Chow said.
The actuaries body also outlined a range of risk reduction ideas, including setting up a flood and disaster risk rating system to integrate into building codes.
Ms Chow said risk reduction was the only way to sustainably address affordability problems in a changing climate.
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