Carolyn and Ian Smith are paying almost $100 a week for home and contents insurance for their home in Harrington. (Source: ABC News/Getty)
Rising insurance costs are forcing some Aussies to change their retirement plans and turning what should be their golden years into a financial “prison”. The average cost of home insurance in Australia has skyrocketed by 51 per cent over the past five years, and it’s becoming harder for retirees to absorb.
Carolyn and Ian Smith are spending nearly $100 a week for home and contents insurance for their place on the NSW Mid North Coast. The couple moved from Sydney to Harrington, an hour south of Port Macquarie, eight years ago and have seen the amount they pay for insurance double in that short space of time.
When combined with other insurances, particularly more expensive health insurance, and general cost-of-living pressures, the retired couple say the future they had planned now no longer looks achievable.
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“It is scary,” Carolyn, 67, told ABC News.
“We try not to think about it too much because it would be a very overwhelming feeling.”
When the couple first retired and started living off their super and pension, their financial adviser predicted they could get close to the age of 100 before their super would run out.
“Now he’s saying we’re going to have to look at downsizing or doing the reverse mortgage thing in about 10 years at the longest if we keep going through our funds at this rate,” Carolyn said.
“That’s 25 years difference.”
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Home insurance premiums have increased by 51 per cent across Australia over the past five years, according to data analytics firm Finity.
The average cost of home insurance was $1,940 in 2020, but in October last year, that rose to $2,938.
Darwin residents are paying the most for home insurance at $4,015, followed by Sydney at $3,964 and Brisbane at $3,872.
The increase has outpaced general inflation and is linked to an increase in natural disasters caused by climate change and an uptick in building costs.
Health insurance premiums are also set to rise on April 1, with the government approving an average price rise of 4.41 per cent. This will be the biggest average increase since 2017.
Recent research by the Climate Council found 54 per cent of Aussies with home insurance were worried that extreme weather would make insurance unaffordable or unavailable where they live, with 46 per cent already experiencing a hike in premiums.
One in five people said they were likely to consider going without insurance if worsening weather keeps pushing up the cost.
Rising premiums mean some retirees are choosing between cutting back on other living expenses or forgoing insurance altogether.
The Combined Pensioners and Superannuants Association of New South Wales (CPSA) said it was increasingly hearing from members that insurance costs were creating a “sense of anxiety” and putting some in a “very difficult position”.
“These are fixed incomes that once something changes in their budget, like their home insurance premiums going up above the level of inflation, suddenly their situation becomes much more precarious,” senior policy officer Billy Pringle told ABC News.
“It turns retirement into a little bit of a prison.”
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