Two-Thirds of Australians Resist Subsidising Flood-Prone Homes: What the Youi Survey Means for Insurance and Mortgages

What the Youi survey found

Youi asked more than 1,200 people across Australia how flood risk should be handled, and 66% were either unwilling or unsure about paying higher premiums so that people in flood-prone areas pay less. realestate.com.au reported the survey on 8 November 2026, alongside the finding that more than two million Australian homes are flood-prone.

This article is general information only, not personal financial advice. A purchase, loan or insurance decision that turns on flood risk deserves review by a licensed professional who knows your circumstances.

The share of respondents who wanted to pay nothing extra, by state:

• South Australia: 52%
• Western Australia: 50.9%
• Queensland: 49%
• Tasmania: 43.5%
• Victoria: 43.2%
• New South Wales: 42.5%

Adding the undecided responses takes the national figure to 66%. Among people who would contribute, most stopped at $300 added to their own premium. Asked what should be done, respondents put restricting development in flood zones first, then improving flood defences and infrastructure.

Why the argument is really about insurance pools

Nathaniel Simpson, Youi's chief executive, said insurance spreads cost across a wider pool of people, which minimises costs for as many policyholders as possible. He added that people insured in flood-risk areas also help offset storm risk in other areas.

Nicki Hutley, an independent economist and Climate Council councillor, read the same numbers as a misunderstanding of how insurance works and as an attitude she called "really distressing". She said separating pools to remove higher-risk properties would probably leave those properties without cover. In some places, she said, that has already happened: cover is unavailable or too expensive.

A cross-subsidy is the share of a premium that pays for someone else's expected losses rather than your own. Simpson's point is that the transfer runs in both directions. Hutley's is that the cost reappears elsewhere, and if government ends up paying for clean-up, taxpayers carry it.

Premiums were already climbing

The ACCC's fourth report following the introduction of the cyclone reinsurance pool found that flood risk, particularly riverine flood, played a significant role in the pressure on home insurance affordability, and that premiums across Australia are generally high and rising.

AHURI published its research in April 2025 while flooding was affecting large parts of Queensland and NSW. The report put the 2023 increase in home insurance premiums at 28% on average, with the highest-risk properties up more than 50%, and found underinsurance becoming more common.

Where insurers withdraw, the effect concentrates. Smaller insurers are more likely to target particular areas by geography or risk profile, and their tendency to avoid high flood-risk locations can hold down premiums for lower-risk customers while worsening non-insurance and underinsurance in flood-prone places. State and territory taxes and levies also sit on top of the premium, and the parliamentary inquiry into flood insurance catalogued them by jurisdiction.

Which homes count as flood-prone

Flood hazard areas are identified by the relevant state, territory or local government authority. Geoscience Australia maintains the Australian Flood Risk Information Portal, which catalogues flood studies and maps contributed by local, state and territory governments up to 2018, more than 1,500 references in total. Uncertainty over who owns each study means the portal usually publishes details of a study rather than the study itself, except where ownership is clearly established.

That leaves flood mapping as a mix of local and state work rather than a single national layer. For a rough international benchmark, FEMA in the United States treats any area with a 1% or higher annual chance of flooding as high risk, which is at least a one-in-four chance over a 30-year mortgage, and still notes that no zone is risk-free.

For a specific address, two levels matter: the defined flood level applied by the local authority, and the flood hazard level derived from it that sets minimum floor heights.

Who decides what gets built in a flood zone

Building ministers from the Australian Government and the states and territories directed the Australian Building Codes Board to develop a standard for construction in flood hazard areas, which it published in 2019. The standard aims to reduce the risk of death or injury to occupants of buildings in flood hazard areas, and limiting development within floodplains is one of the ways it manages residual risk. Identification of the areas themselves sits with state, territory and local authorities.

The Youi survey records a preference for restricting development, not a drafted policy. Simpson called for coordinated work across federal, state and local governments and for flood preparedness to stop being treated as a political point. Buybacks already exist as one tool: governments offer to buy properties voluntarily where risk is extreme, retrofits would not work and community-level mitigation is unrealistic.

What flood risk does to a mortgage

Lenders standardly require borrowers to keep home insurance for the life of the loan. Financial Counselling Australia told the parliamentary inquiry that in practice a mortgage can be taken out without the borrower showing evidence of ongoing appropriate insurance.

Simpson said housing affordability should be treated as a whole-of-cost question covering live-in costs rather than the mortgage alone, and that better financial literacy would help buyers anticipate premiums instead of meeting them as a surprise. The Insurance Council of Australia submitted that publicly available flood risk data would improve awareness of vulnerable areas, and the Planning Institute of Australia (Victoria) noted that awareness of flood risk can strongly influence a purchase decision and the level of insurance held.

For a buyer, the exposure is that a premium quoted at settlement is not fixed for the life of the loan. Hutley said the market is already withdrawing from some high-risk areas, so a loan that was affordable with one year's premium can become harder to hold if the next quote jumps or cover disappears.

Steps for owners and buyers

1. Get the defined flood level the local authority applies to the address.
2. Confirm whether the property sits inside a mapped floodplain.
3. Obtain a written insurance quote for that exact address.
4. Add the quoted premium to the mortgage repayment when you work out what you can afford.
5. Compare the floor level in the building report with the flood hazard level.
6. Price mitigation before building work starts rather than after.
7. Check whether a government buyback program covers the area.

What would change the picture

Hutley suggested Infrastructure Australia audit where levees and other systems could cut risk, which she said could hopefully bring premiums down. She also argued for better home design and for not building in some places at all.

AHURI recommended that the Australian Government consider a federal insurance scheme for people who cannot afford high premiums, and its lead researcher, Professor David Sanderson of UNSW, said a market-based insurance system is not likely to deliver the sustainable solutions required. The report also found that most insurers do not cover the extra cost of rebuilding to a more resilient standard.

Simpson said development in areas with some flood risk can still work if the thinking happens before the housing goes in, which he said is more cost effective.

The material covered here does not include a drafted proposal to ban floodway development. The survey measures what people want done, and the split it reveals is the gap any future policy would have to close.

Questions people ask about flood risk and insurance

Does the survey change what insurers charge?

The survey records opinion, not pricing. Hutley's warning is about what happens if pools are separated: high-risk areas would likely lose cover, and some already have.

How much extra are people willing to pay?

Among respondents who would contribute, most capped it at $300 on their own premium.

Is there government support for flood insurance in Australia?

The cyclone reinsurance pool applies to parts of northern Australia exposed to cyclone and cyclone-related flood damage. AHURI recommended that the Australian Government consider a federal insurance scheme for people who cannot afford high premiums. Buybacks are another route where risk is extreme.

Do I need insurance to keep a mortgage?

Lenders standardly require borrowers to maintain home insurance during the loan. The inquiry heard that evidence of ongoing cover is not always collected in practice.

Who produces the flood maps?

State, territory and local authorities identify flood hazard areas. Geoscience Australia's portal catalogues studies completed up to 2018, with more than 1,500 references.

Are there rules against building in a flood zone?

The ABCB standard addresses construction in flood hazard areas and treats limiting development in floodplains as part of managing risk. Mapping and planning decisions sit with state, territory and local governments.

Sources and dates

• realestate.com.au, "Australians push to ban floodway housing, two thirds reject premium hikes" by Nathan Mawby, published 8 November 2026 (Youi survey, state breakdown, chief executive and economist comments).
• ACCC, fourth report following the introduction of the cyclone reinsurance pool (premium trends, riverine flood and affordability).
• AHURI, "As disasters become more frequent, home insurance must evolve", 3 April 2025.
• Australian Building Codes Board, ABCB Standard: Construction of buildings in flood hazard areas, 2019.