Rebuilding after disasters costs 70% more as material prices surge, insurance report finds

A new report from the Insurance Council of Australia reveals that the cost to build a home has risen almost 30% nationally over five years, with prices climbing most sharply in Queensland and northern Australia, where building a home now costs 44% more than in 2021.

Materials most needed after a natural disaster have increased the most: roof tiles are up more than 70% — more than three times the rate of inflation — while windows, plasterboard and concrete have increased by at least 37%.

Between 2022 and 2026, insurers received 400,000 claims for repairs or rebuilding after declared events, costing $11.3 billion. In 2025 alone, 145,392 homes were damaged in declared events across Australia, compared with 172,657 new homes built nationally. In Queensland over the past five years, insurers have repaired or replaced more than 240,000 homes.

Insurance Council Australia chief executive Andrew Hall said inflation was driving up costs and, consequently, insurance premiums. "In states like Queensland, where quite often it's severe storms that impact a home, those things that need replacing immediately are the things that are costing the most. That all goes into the calculation when we're looking at the cost of an insurance premium," he said.

Mr Hall described a "double whammy" where insurers compete with builders for materials and trades. "These are homes that are already existing, which means we're competing with the same sector that's trying to deliver new homes to meet the housing challenges," he said. "Not only are we trying to meet the affordability and accessibility challenge, we're at the same time competing for the same builders and materials to repair existing housing stock."

The report recommends building more resilient homes and stopping development in high-risk areas. The findings are illustrated by the experience of Holloways Beach resident Kathy Pitt, whose home was gutted by Cyclone Jasper. As an uninsured owner, she spent approximately $230,000 — $160,000 from her superannuation and about $70,000 in government grants — on repairs, with work still ongoing.

Why This Matters

Homeowners face rising insurance premiums as material costs drive up claim payouts, potentially making insurance unaffordable in high-risk areas.
The competition for builders and materials between disaster repairs and new housing construction threatens Australia's ability to address its housing supply crisis.
As extreme weather events become more frequent, the financial burden on homeowners, insurers and governments is set to grow unless mitigation measures are adopted.

Background

Australia has experienced a series of severe natural disasters in recent years, including floods, cyclones and bushfires, which have placed enormous strain on the construction and insurance sectors. The Insurance Council of Australia represents general insurers and regularly publishes reports on the cost of disasters. The housing affordability crisis — driven by supply shortages, rising interest rates and population growth — has been a persistent policy challenge. The report highlights an emerging conflict between rebuilding after disasters and building new homes to meet demand.

Key Perspectives

Insurance Council of Australia: Argues that inflation is the main driver of rising material costs and premiums, and that insurers are forced to compete with the home-building sector for scarce trades and materials. Supports stricter building standards and land-use planning to reduce risk.

Homeowners in disaster-prone areas: People like Kathy Pitt, who lost her home in Cyclone Jasper and spent life savings on repairs, face extreme financial stress. Uninsured or underinsured owners are particularly vulnerable, and rising premiums may push more into that category.

Builders and housing advocates: The tension between repair and new-build demand could slow housing supply. They may call for government investment in training and material supply chains, as well as policies to prioritise new housing.

Critics/Skeptics: Some may argue that the insurance industry has an interest in attributing premium rises to material costs rather than its own profit margins or risk pricing. Others may question whether the report’s recommendation to stop building in high-risk areas is politically feasible given existing settlements.

What to Watch

Whether state and federal governments adopt the report’s recommendations on resilient building standards and restrictions on development in high-risk zones.
Changes to insurance premiums in Queensland and northern Australia in the next renewal cycles, and any resulting increase in uninsured properties.
Moves by the construction industry to expand capacity and material supply, including potential government subsidies or training schemes.

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