SYDNEY, Aug 26 Reuters Home insurance is becoming unaffordable for a growing number of Australian households as increased climate threats drive up their premiums, potentially putting billions of dollars in mortgage loans at risk, a report said on Monday.

As of March 2024, 15 of Australian households were experiencing home insurance affordability stress, which is defined as having premiums that cost more than four weeks39; of their incomes, the report from the Actuaries Institute found.

That is equivalent to 1.61 million households, compared to 1.24 million found to be facing affordability stress a year ago an increase of 30.

Rising insurance costs have fuelled inflation in Australia and there are signs that some homeowners can no longer afford to protect their homes due to climaterelated risks and high construction costs.

Unfortunately, we expect this will continue because of the overall increasing risk of natural disasters associated with climate change, which will continue to put upward pressure on premiums, said the report39;s lead author Sharanjit Paddam.

The report estimated that 5 of Australian households with home loans were experiencing extreme pressures, with their insurance premiums averaging A5,216 3,505 a year, more than double the average of A2,124.

Those households facing the most extreme affordability stress have about A57 billion in outstanding mortgage loans as of March, representing 3 of all home loan assets, it said.

If their home is damaged…