According to realestate.com.au, new research from insurer Youi has found that 66 per cent of Australians are either unwilling or unsure about paying higher premiums to subsidise flood-risk properties, with South Australians the most resistant at 52 per cent flatly opposed. Among those willing to support people living in flood-risk areas, most topped out at $300 being added to their own premiums.
What the Youi Research Actually Found
The survey, conducted by Youi and detailed by realestate.com.au, breaks down resistance to premium cross-subsidisation state by state. South Australia topped the list at 52 per cent opposed, followed by Western Australia at 50.9 per cent, Queensland at 49 per cent, Tasmania at 43.5 per cent, Victoria at 43.2 per cent and NSW at 42.5 per cent.
Related reading: REAStats property market data.
Rather than accepting higher bills to support flood-prone neighbours, respondents overwhelmingly preferred a different approach: restrict development in flood zones first, then invest in flood defences and infrastructure. Insurance has traditionally worked by pooling risk broadly so no single policyholder bears the full cost of a catastrophic event. Youi chief executive Nathaniel Simpson said it was important to note that a wider pool of people meant minimised costs for as many people as possible, with even those insured and living in flood-risk areas also helping to offset costs for storm risks in other areas.
Simpson argued the data shouldn't be read as Australians lacking empathy. He framed the result as a preference for solving root causes rather than funding endless clean-up: "The Australian spirit is generous and inclusive and we rally around each other… the message to me is that while we have the opportunity to direct what we can to solving the underlying problem, to do that rather than increasing premium costs." He added that unless the underlying flood exposure is addressed, "it will be paid by someone" regardless of how reluctant the public is to accept it.
Why This Signals Trouble for Insurance Availability
Independent economist and Climate Council member Nicki Hutley, also cited in the realestate.com.au report, called the survey findings "a sign of naivety in how insurance worked" and "really distressing" as an attitude. Her concern is structural: if insurers respond to policyholder pressure by segmenting pools and charging flood-exposed properties their true actuarial cost, premiums in high-risk postcodes could become unaffordable or unavailable altogether. Hutley noted that in some areas "it is already not available, or too expensive, so the market is already getting there anyway."
This matters because insurance pricing doesn't disappear risk — it reallocates who pays for it. If broad risk pooling breaks down because customers push back on subsidising others, insurers have little choice but to price flood-exposed homes individually. Hutley's warning is blunt: "there's always a cost somewhere, and it will be up to tax payers if the government is left with the clean-up bill" when private insurance becomes unworkable.
More than two million Australian homes are classified as flood-prone, yet among those willing to help fund flood-area premiums, most capped their own contribution at $300 — a gap between the scale of exposure and the public's tolerance for subsidising it that insurers and governments will have to reconcile.
Background: How Flood Risk Fits the Broader Insurance Picture
Rising building costs and insurance claim events were combining to drive up premiums. Buyers financing a purchase with a smaller deposit should understand how lenders treat risk more broadly; our guide to LMI vs Family Guarantee explains the two main pathways for low-deposit buyers, both of which interact with a lender's view of overall property risk, including location-based exposure.
Hutley's proposed remedies — an Infrastructure Australia audit of areas where levees and defensive infrastructure could reduce risk, plus smarter home design for flood resilience — point to a policy response rather than a purely market one. Simpson agreed co-ordinated action across federal, state and local government is needed, rather than treating flood preparedness "as a political point."
What This Means for Buyers, Owners and Investors
For anyone purchasing in a flood-prone area, the message from this research is clear: don't assume premiums will stay stable or that cross-subsidisation will continue indefinitely. Budgeting for insurance as a recurring, potentially rising cost is now essential due diligence, not optional.
Buyers should request current premium quotes before exchanging contracts on any property with known flood history, rather than relying on the vendor's existing policy cost. A buyer's agent can help assess this risk during due diligence — see our guide on what a buyer's agent does for how professional advice can flag insurance red flags early. Investors should also factor land tax exposure into total holding costs alongside insurance; our state-by-state land tax guide covers how these costs stack by jurisdiction.
Owners already in flood-exposed suburbs should treat Simpson's comments about pre-emptive defences seriously. With two million homes nationally carrying some flood exposure and public tolerance for subsidy capped near $300, the gap between risk and willingness-to-pay is one every property owner in an exposed zone needs to plan around now, not after the next claim event.
Further reading
This article was produced with AI assistance and reviewed for accuracy. Content is for informational purposes only and does not constitute financial or property investment advice.
