The Economy, Stupid An Uninsurable Future
Nov 13, 2025
In this discussion, Paula Jazabkowski, a strategic management professor, and James Ayres, a senior writer at the Australian Financial Review, dive into the crisis facing Australia’s insurance market. They address the alarming rise in premiums due to climate change and inflation. Paula emphasizes the need for a rethink in disaster insurance, while James highlights the social dilemmas of unaffordability. Together, they explore the balance between market profits and social protection, advocating for systemic changes to ensure the insurance landscape remains viable and fair.
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Insurance System Under Stress
- Rising premiums and mass uninsurance show the system is under stress and failing vulnerable households.
- Insurance now signals risk but may be unaffordable where people most need protection.
Why Premiums Keep Rising
- Premiums rise because reconstruction costs, inflation and rising reinsurance prices all increase insurers' future payout estimates.
- Climate change and legacy development in exposed areas combine to push risk and prices higher.
Price Signals Clash With Non‑Fungible Homes
- Insurance provides a price signal about risk but that signal assumes assets are easily movable or replaceable.
- Houses are often non-fungible so high premiums don't mean people can simply exit risk without heavy social cost.