Cost-of-living and the climate crisis

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Figure 2 shows that insurance prices have been increasing faster than general prices since 2015 and that this gap has increased significantly since 2022 in the wake of major flooding in eastern Australia. Research from the Actuaries Institute shows that nearly one in eight households – 1.25 million – suffer home insurance affordability stress and pay more than four weeks gross income on home insurance premiums.5 One in 20 households pay more than seven weeks of gross income on home insurance. Those facing the most extreme affordability stress pay almost nine weeks of their income on home insurance.

How climate change inaction drove up the cost-of-living

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Energy pricing Home insuranceCost and standard of living InflationClimate change Climate change mitigationAustralia

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Cost-of-living and the climate crisis 365.55 KB
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The report finds direct connections between the climate crisis and rising cost-of-living pressures. It posits that failure to lower emissions now will only aggravate the crisis, with each moment of inaction compounding the pressure on households. The report identifies three key areas where the climate crisis is directly driving up costs for Australians: insurance, food and energy. These sectors combined have accounted for over one fifth of the consumer price inflation experienced in Australia since 2022 and the impact of climate change on the cost-of-living is only likely to grow.

The report underscores the need for urgent climate action to protect Australian households from these escalating costs. Decades of inadequate climate action has left Australia heavily reliant on fossil fuels for electricity, heating and transportation. Addressing the root causes of climate change is essential to lowering future risks and alleviating economic strain.

Key findings

  • Insurance premiums have soared due to an increase in natural disasters, with some households now spending over seven weeks of gross income just to cover home insurance.
  • Food prices have risen by 20% since 2020, with climate-related disruptions wiping out harvests and making it harder for some regions to grow food.
  • Energy costs remain high due to a reliance on fossil fuels, underinvestment in renewables, and fossil fuel exports forcing Australians to compete with the global market for Australia’s resources.
  • The impacts of the climate crisis are disproportionately affecting lower-income and regional households, who are already feeling the financial strain more severely.
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