Home Insurance Crisis: What Borrowers Must Know in 2026

APRA data released in May 2026 reveals Australia's home insurance market is structurally broken — and rising premiums are far from over.

Most homeowners think about their mortgage and their insurance as separate concerns. Right now, the connection between the two has never mattered more. APRA quarterly data released on 29 May 2026 — covering September 2023 to March 2026 across all APRA-authorised general insurers — makes it plain: Australia's home insurance market is not just under pressure. It is losing money despite record-high premiums, and that has direct consequences for every Australian who owns or is buying a home.

The data shows that gross written premium for the householders insurance class grew from $3.82 billion in the December 2023 quarter to $4.49 billion in December 2025 — an increase of 17.4% in just two years. Insurers have been raising prices steadily and consistently. By conventional market logic, profitability should have followed. It has not.

A Market Losing Money Despite Higher Premiums

In four of the ten quarters in the APRA dataset, the householders insurance service result — the underwriting profit or loss after reinsurance — was negative. The losses were $681 million in December 2023, $194 million in March 2025, $191 million in March 2025, and $1.08 billion in December 2025.

That final figure should stop every homeowner in their tracks. In a single quarter, claims consumed nearly 80 cents of every premium dollar written — the worst underwriting result for any major insurance class in the entire dataset.

As MPA Australia reports, the volatility maps directly onto Australia's catastrophe calendar. The good quarters — June 2025 at $711 million positive, September 2025 at $636 million — coincide with relatively benign weather periods. The loss quarters hit when the storms, floods, and fires did.

An Insurance Council of Australia spokesperson put the driver plainly: "Insurance premiums are under pressure across the country due to escalating extreme weather costs, development in high-risk locations, a 40% rise in the cost of building materials since 2022, the growing value of our assets, and insurance taxes."

In 2025 alone, ICA-declared extreme weather events cost $4.8 billion in insured losses across 294,000 claims. The December 2025 quarter saw net claims reach $3.6 billion against gross written premium of $4.49 billion. In the June 2025 quarter — just two reporting periods earlier — net claims were $1.53 billion against a similar premium base. The same book of business swung from a $711 million profit to a $1.08 billion loss in the space of two quarters.

What Rising Premiums Mean for Homeowners and Borrowers

The premium increases are not abstract. Finity data shows the average home insurance premium rose 51% between 2020 and October 2025, from $1,940 to $2,938. Darwin records the highest average capital city premium at $4,015, followed by Sydney at $3,964 and Brisbane at $3,872.

A YouGov survey commissioned by the Climate Council found that 54% of insured respondents are concerned that bushfires, floods, and severe storms could make home insurance unaffordable or unavailable in their area. One in five said they may consider going without cover if premiums keep rising. The Australia Institute estimated in 2025 that approximately 1.4 million homes are already either uninsured or underinsured.

In NSW, the ICA notes that up to 37% of a premium is composed of tax once you add GST, stamp duty, and the Emergency Services Levy — a burden that sits entirely on the policyholder.

For borrowers, the risk runs deeper than premium sticker shock. Construction costs have risen substantially: a building insured for $800,000 in 2021 may now cost $1.1 million to rebuild. Homeowners who have not reviewed their sum insured in the past few years are likely carrying a coverage gap. In the event of a major claim, the insurer pays only to the insured amount — not the full replacement cost.

The March 2026 quarter produced a householders underwriting result of negative $10 million. Technically better than the December catastrophe — but a line generating $4.25 billion in quarterly premium and still losing money is not in good health. Gallagher Bassett's 2026 Claims Insights report confirmed that premium affordability and insurability are now the leading business challenge for Australian insurers.

The ICA also flagged who bears the heaviest burden: approximately 70% of households exposed to the highest flood-risk sit in areas where the median income is below the national median, and 35% are in areas where median income falls below the poverty line. For borrowers in those regions, the risk of becoming uninsurable is a serious financial planning consideration, not a peripheral one.

It is also worth noting that most mortgage lenders require you to maintain adequate home insurance as a condition of your loan. An underinsured property creates risk for both you and your lender. If you are [comparing home loans or looking to refinance](/home-loans/refinance), factor the full cost of insurance — at proper replacement value — into your total cost of borrowing. Our [repayment calculator](/calculators/repayment) can help you see the full picture of what a home loan actually costs each month.

If you have not reviewed your policy in the past 12 months, do it before your next renewal — and focus specifically on the sum insured, not just the premium.

MPA Australia's full analysis draws on the [APRA Quarterly General Insurance Performance Statistics Database](https://www.mpamag.com/au/news/general/home-insurance-is-in-structural-crisis-and-apra-numbers-tell-you-exactly-how-bad-it-is/578873), covering September 2023 to March 2026, released 29 May 2026.