Report: Social justice and the future of fire insurance in Australia

This report asks policymakers, and society more broadly, to reflect on the values that guide our insurance models in the light of climate-induced extremes like the 2019-20 megafires in Australia.

The report proposes the adoption of an alternative insurance model which will ensure housing security for future generations. It recommends government-led insurance, similar to the Medicare model, as the most ethical approach.

Key findings:

• The frequency and severity of climate extremes— including those that initiate and exacerbate bushfires— is increasing at an alarming rate. Because of this, 1 in 20 Australian homes could be uninsurable by the end of the century.
• Australia can no longer operate its bushfire insurance regime according to a purely market-based distribution of risk model.
• Bushfire insurance should be more like medicare than current home insurance.
• There are intergenerational unfairness implications for market based insurance models.
• The best approach for the Australian bushfire insurance regime is a model based on fairness as social justice.
• Ensuring that a bushfire insurance regime is both just and practicable will require the simultaneous creation of additional supportive policies and potential limitations on insurance coverage.