When Sydney homeowner Andrea McGann received the renewal letter for her building and contents insurance in the mail last week, she was flabbergasted to be quoted $19,311 to insure her modest brick home.
“I just couldn’t believe what I was reading,” McGann said. “I was walking around in circles and couldn’t think straight. That someone would expect a human in a normal, simple house would have $19,000 a year to pay an insurer, it’s un-Australian. It’s just not fair.”
McGann, who bought her a three-bedroom house in Botany with her husband six years ago, paid $6259 last year and about $3637 in 2024, meaning her premiums would be more than five times higher than two years ago.
When she took to social media, she found a lot of other Botany residents were in a similar situation.
It is a sign of how insurance companies are slashing their appetite for climate risk, experts say, not just for riverine flooding, but also flash flooding and coastal storm surges in highly urban areas.
Insurer QBE told this masthead its flood risk assessments were periodically reviewed and updated as new data and modelling became available.
The Insurance Council of Australia said an increase of this size would usually reflect new information from flood mapping or a change in the underwriter’s risk appetite or both.
“Each insurer uses their own unique, sophisticated data sets and risk assessment capabilities to price premiums based on risk exposure,” said the spokesperson for the peak body. “One source is council flood maps.”
The spokesperson said premiums were under pressure because building costs were up 40 per cent since 2022, extreme weather was becoming more prevalent, and asset values were increasing. In NSW up to 37 per cent of a premium was tax, the spokesperson added.
In October 2025, the average premium across Greater Sydney was $3964, according to figures from actuarial and insurance consultancy Finity.
Average premiums in Hawkesbury City Council area in 2025 were more than double the city average because of the risk of riverine flooding, but most urban areas were in line with average.
Big flooding events on the city fringe such as Hawkesbury or in regional areas such as the Northern Rivers or Central West have been costly for the insurance industry.
But Finity principal Stephen Lau said climate change was increasing the risk of natural disasters in urban areas as well, especially for flash flooding from stormwater.
“As the weather has warmed generally … the consensus is that the extreme rainfall would occur more frequently, more rapidly,” Lau said. “The climate has already warmed since the industrial period, so it has experienced some of that trend with the extreme rainfall, and will continue to do so as the climate keeps warming.”
Lau said coastal flooding from rising sea levels would be a growing problem over the coming decades.
Dr Andy Smith, co-founder and chief operating officer of Fathom, which provides flood risk intelligence, said insurers had better information about risk down to property address than in the past, and their risk appetite was decreasing.
“In recent years, our ability to build flood models has really rapidly improved,” Smith said. “In some areas, it will mean that there’s less risk than we could have assumed before, but in some areas it will highlight that there is more risk than before or that risk is there when previously there was no information.”
During the 2011 Queensland floods, Smith said, more than 50 per cent of the inundated houses in some areas were not in government flood zones.
Bayside Council has not updated the flood maps for the eastern part of the local government area, where McGann lives, since 2020.
When McGann rang QBE, they did not try to convince her to stay, but immediately asked if she would like to cancel. She was told her storm rating had increased, that the insurer had perceived significant loss due to damaging winds and floods, and that “Botany went underwater often”.
McGann, who lives several blocks from Botany Bay, said he has never even had water over the front gutter in six years. She has made only the odd small claim in more than 40 years as a QBE customer at various homes.
“By the time my house is flooded, the airport would be well and truly underwater,” she said. “I would understand if I was living in the Northern Rivers and my house had been washed away, but that’s not the case.”
Fortunately for McGann, she was able to buy a policy with rival insurance firm Youi for $5056 – a saving from last year.
The Insurance Council spokesperson said it paid to shop around because every company assessed and priced risk differently.
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Caitlin Fitzsimmons is the environment and climate reporter for The Sydney Morning Herald. She was previously the social affairs reporter and the Money editor.Connect via email.