People with insufficient home insurance more likely to risk their lives in bushfires, experts say | Australia news

People are more likely to risk their lives in bushfires if they are uninsured or underinsured, experts have said.

In the chaos of an approaching fire, most people struggle to make rational decisions; having no house insurance could feed into making the dangerous decision to stay and protect a home, bushfire behaviour and management professor at the University of Melbourne, Trent Penman, said.

Last year, 1.6m Australian households struggled to pay for home insurance, a 30% increase on the year before, according to the Actuaries Institute. Some areas also are becoming uninsurable.

A 2024 Compare the Market survey found more than one in four Australians did not have home or contents insurance.

It’s also the first essential item people stopped paying for “when things got tough”, the Australian Council of Social Service (Acoss) has found.

“Insurance premiums have surged by an average of 11% and as high as 30% in disaster-prone regions over the past year,” chief executive officer Dr Cassandra Goldie said.

“With catastrophic and unpredictable extreme weather events increasing in all regions across Australia due to climate change, we need to do things differently when it comes to insurance, and we must find specific ways to support people and communities experiencing financial disadvantage,” Goldie said.

Acoss wants insurance to be treated as an essential service, and measures introduced to cut insurance costs for people on low incomes.

After the 2009 Black Saturday fires in Victoria that killed 173 people and destroyed 2,000 homes, authorities changed the advice about staying and defending a well prepared property or leaving early, to emphasise that leaving early was the safest option.

About 13% of the property losses in the Black Saturday fires were uninsured.

Better education, emergency accommodation, property protection and affordable insurance were among the factors that would encourage people to “leave their homes willingly in the face of imminent disasters”, according to University of Newcastle research published in the International Journal of Disaster Risk Reduction in 2024. The researchers interviewed people in NSW in the wake of the devastating 2019-2020 bushfires.

Making decisions under threat of a bushfire is very different from making a decision on a “normal, calm day”, said Penman.

“There’ll be [tree] branches down, it’ll be dark and loud, there will be embers and sirens and a lot going on,” he said. “On Black Saturday, couples left their discussions about what to do until the fire was closer … sometimes the decision gets made for them. It’s either too late to leave or the house is already alight and they’re at personal risk.

He said in those kinds of situations, being underinsured or having no insurance could influence whether people stayed or left.

It’s a situation Adelaide Hills resident David Cobbold has experienced.

After the catastrophic 2019-2020 bushfire season, Cobbold, who runs the Warrawong Wildlife Sanctuary in the Adelaide Hills, struggled to get insurance.

“You’re starting to get desperate. This is your business, life savings, superannuation, children’s inheritance.”

Quotes for complete cover were as high as $150,000, with a maximum claim of $500,000, well below the sanctuary’s value of $1.7m.

“Even if we could afford it, we’re not getting value from it,” he said.

According to the insurance industry, extreme weather, the climate crisis, and construction costs are driving up prices, but the industry has been criticised for a lack of transparency about how those costs are calculated.

The emergency management minister, Jenny McAllister, said the federal government was working with the sector to support vulnerable communities.

“We know that the climate is changing, and Australians can expect to experience more frequent and severe natural disasters. We’re working with industry to invest in resilience and deliver cost-of-living savings to households,” McAllister said.

The Insurance Council of Australia said it would continue to “advocate for programs that reduce risk as the most cost-effective and sustainable way to reduce rising pressure on insurance premiums”.

Cobbold eventually found a suitable insurance policy but there were periods where he would have stayed to defend his property rather than lose everything.

Penman said making a decision early was very important. In the 2013 NSW bushfires, while some people were trying to fight the fires, others were returning to their homes to collect possessions or pets.

“People need to understand their risk and have some really hard thoughts about what they’re willing to lose and what they can’t replace. At the end of the day, a house is just a structure. We can’t replace people’s lives.”