The report’s lead author Sharanjit Paddam said: “While insurance remains generally affordable for 85% of households, it’s concerning that there’s now 1.6 million households struggling to afford to insure their homes, up from 1.24 million a year ago. This is because increases in premiums are outpacing wages growth. Unfortunately, we expect this will continue because of the overall increasing risk of natural disasters associated with climate change, which will continue to put upward pressure on premiums.”

The implications extend beyond household finances. An estimated 5% of Australian households with mortgages are experiencing insurance affordability stress, representing $57 billion of loan balances and 3% of all home loan assets.

Given that these figures reflect conditions before 2025’s $4.8 billion catastrophe year and the further premium increases recorded in the 12 months to June 2026, the current stress level is likely higher. APRA’s March 2026 climate vulnerability assessment found that between 2010 and 2025, Australian home insurance premiums rose at an annual average rate of 7.2%, while wages grew at 3.1% annually.

The protection gap is a measurable consequence. Of roughly 242,000 dwellings assessed as facing severe to extreme flood risk, about 77% are not insured for flood – more than 186,000 homes – with seven in ten of those properties located in areas with incomes below the national average.

Read next: Half the home insurance market now prices bushfire mitigation

Victoria’s vehicle theft crisis creates a state-specific motor underwriting problem

Motor insurance quotes rose an average of $193.63 across the five capitals in the year to June 2026, per Compare the Market, with Melbourne recording the largest increase at $285.03. The ICA’s Insurance Statistics Australia data, released June 4, 2026, provides the underwriting context behind that figure.

Victoria recorded a 25% increase in motor theft claims and a 37% rise in incurred costs from 2024 to 2025. The state’s total bill – $243 million across more than 12,500 claims – exceeded the combined sum of all other states analysed. While Western Australia, South Australia, and Queensland each recorded reductions of 15%, 14%, and 12% respectively, theft claim frequency in Victoria rose 31%, climbing from 0.35% to 0.46% in metropolitan areas.

ICA CEO Andrew Hall said: “A car is stolen or broken into every 42 minutes in Victoria. This level of crime is not acceptable. Each year, Victoria’s numbers stand apart from the rest of the country, and that gap is widening.

“While every other state is effectively reducing car theft, in Victoria the volume of claims and the costs involved remain at unacceptable levels and that sustained pattern is what’s most concerning.”

The geographic concentration of that risk – and its sharp divergence from every other state – has direct implications for underwriters and portfolio managers assessing Victorian motor book exposure.

AFCA data: two reporting periods, one consistent signal

AFCA’s complaints data, drawn from two separate reporting periods, points in the same direction. In the 2024-25 financial year, general insurance complaints rose 17% to 34,231, driven largely by add-on insurance and delays in motor vehicle claims handling.

In the 2025 calendar year, AFCA received 111,373 complaints in total – a 14% increase and a record – with motor vehicle insurance generating 12,879 complaints, up 18%, and home building insurance generating 7,359 complaints.

Delay in claim handling was the most complained-about issue across all financial services. Across both periods, AFCA noted that complaints about premium increases rose and encouraged insurers to more clearly explain premium changes, including the effects of external cost pressures.

Against that backdrop, the intermediated channel’s complaints profile remains contained. General insurance broker complaints represented approximately 0.8% of total complaints in the 2024-25 financial year, per the National Insurance Brokers Association of Australia’s (NIBA) analysis of AFCA Datacube data – a differential that points to the role brokers play in managing client expectations through a claims environment generating record dispute volumes industry-wide.