Aussie homeowners could face an insurance crisis following the Los Angeles fires

Australians may have to pay more for their home insurance due to the catastrophic fires in Los Angeles, as international firms raise premiums to pay for the expected massive payouts from those blazes.

Natural disasters have already fuelled Australians’ insurance costs beyond inflation, analysis from The Australia Institute has shown.

Even events on the other side of the world, like the Los Angeles fires, can still impact Australia.

This has left disaster-prone regions of Australia almost uninsurable as premiums become unaffordable, The Australia Institute senior research fellow David Richardson said.

‘The increasing number, scale and intensity of natural disasters like bushfires, cyclones and floods – due to our changing climate – is a global phenomenon which will impact insurance premiums around the world, including here in Australia,’ he said.

‘The LA fires are a tragedy which will have global consequences for years to come.’

The reinsurance market – effectively insurance for insurance companies – also has a role to play.

Hurricane Ian, which ripped through Florida in 2022, made 2023 the third-costliest hurricane season on record, which added to global pressures in the reinsurance sector.

Natural disasters like bushfires and floods have increased insurance costs beyond inflation

California's wildfires will impact insurance premiums around the world

California’s wildfires will impact insurance premiums around the world

‘As the world’s big reinsurers push up premiums to cover their losses from natural disasters, local insurance companies will be forced to do the same,” Mr Richardson said.

The Los Angeles fires have killed at least 24 people and left thousands more displaced under evacuation orders.

Sewerage, water and power infrastructure has been significantly damaged and more than 12,000 structures have been destroyed.

The cause of the blaze is still unknown and while government agencies have not yet provided damage estimates, the event could be one of the nation’s most expensive natural disasters.

***
Read more at DailyMail.co.uk