Queensland Home Insurance Crisis and the Case for Reestablishing the SGIO
Executive Summary
Queensland is facing a home insurance affordability crisis. In recent years, home and contents insurance premiums have surged across the state, outpacing incomes and leaving many households financially strained or uninsuredtheguardian.cominsuranceasia.com. In some regions, annual premiums now exceed $10,000 – a level at which insurance is becoming a “luxury” rather than a safety netrealestate.com.au. This report examines the deteriorating insurance environment in Queensland, presents comprehensive data on premium increases and their economic impacts, and makes the case for a bold solution: reestablishing a State Government Insurance Office (SGIO).

Key Findings:
•Skyrocketing Premiums and Regional Disparities: Home insurance premiums in Queensland have risen dramatically. The average premium in 2025 is about $2,790 nationally, up from ~$1,700 in 2023realestate.com.au. Queensland’s premiums are significantly higher than the national average – Brisbane’s average is about $11,881, with some homeowners quoted up to $14,900realestate.com.au. Other regional hotspots like Mackay-Whitsunday, the Lockyer Valley, and Townsville face averages around $9,000 (Figure 2.1)realestate.com.aurealestate.com.au. These increases (28% on average in 2023, and over 50% for high-risk propertiesrealestate.com.au) are driven by frequent natural disasters, rising rebuilding costs, and insurers withdrawing from high-risk marketsrealestate.com.aurealestate.com.au.
•Economic Hardship and Underinsurance: Nearly 15% of Australian households (over 1.6 million) are now in “insurance affordability stress,” spending more than four weeks’ income on premiumsstories.uq.edu.auinsuranceasia.com. In regions of Queensland such as Far North Queensland and parts of the west, over 40–50% of households face severe insurance stressactuaries.asn.auinsuranceasia.com. Many families, especially in cyclone- and flood-prone areas, are forgoing coverage because they simply cannot afford the costchange.orgabc.net.au. Underinsurance is rising; for example, only ~23% of homes in the highest flood-risk locations carry flood coverabc.net.au. This exposes communities and the broader economy to greater risk, as uninsured losses must be borne out-of-pocket or by government disaster relief.
•Market Failure – Lack of Affordable Options: The private insurance market is struggling to provide affordable coverage in Queensland’s riskier areas. After events like Cyclone Yasi in 2011, some insurers pulled out of regions north of Rockhampton, causing an “exodus” of coveragerealestate.com.aurealestate.com.au. Even in less extreme cases, lack of competition has meant insurers can charge “outrageous” premiumsrealestate.com.au. Queenslanders are increasingly forced to choose between paying their insurance or their mortgagerealestate.com.au. The situation has been described by experts as approaching “crisis territory” for Brisbane and other high-risk zonesrealestate.com.au.
•The Case for SGIO: Historically, Queensland operated a successful State Government Insurance Office (SGIO) for much of the 20th century. SGIO was originally established in 1916–17 to provide insurance cover to the public and protect state assets
en.wikipedia.org. It offered life, home, and motor insurance at a time when private markets were less developeden.wikipedia.org. The SGIO was eventually corporatised (renamed Suncorp in 1986) and later privatised in the 1990sinsurancenews.com.auinsurancenews.com.au. Given today’s market failure in parts of Queensland, a strong rationale exists to reestablish an SGIO-like entity. A state-backed insurer could prioritise affordability and accessibility over profit, introduce much-needed competition, and serve as an “insurer of last resort” in high-risk areas. This report finds that reestablishing SGIO would likely lower premiums (by providing a not-for-profit alternative and leveraging government risk pooling), increase insurance uptake, and reduce the financial vulnerability of households and the state economy in the face of natural disasters.
•Proposed SGIO Structure: Two structural models are evaluated – a fully government-owned statutory insurer versus a public-private partnership (PPP). A fully government-owned SGIO could be capitalised by the state and run as a public enterprise with a mandate to offer affordable coverage statewide. This model maximizes public control and the ability to cross-subsidise high-risk regions, but requires significant government funding and risk management expertise. A PPP model could involve the government as the majority shareholder or guarantor, partnering with private insurers for operational expertise. This could reduce the fiscal burden and tap industry know-how, but may dilute the affordability mandate. The report weighs these options and outlines governance measures to ensure any SGIO structure stays focused on public benefit.
•Economic and Social Benefits: A reestablished SGIO could deliver substantial economic benefits. For households, even a moderate premium reduction (e.g. 20%) would save thousands of dollars annually for those in high-risk zones, freeing up disposable income to spend in local economies. On a macro level, widespread insurance coverage means faster recovery from disasters – insurance claims inject rebuilding funds swiftly, whereas uninsured losses often lead to prolonged hardship or reliance on government aid. Keeping properties insured also protects the banking sector (reducing default risk on mortgages) and maintains property values. Additionally, a state insurer could invest premiums within Queensland and channel funds into resilience projects. Socially, a government-backed solution to the insurance crisis would generate significant public goodwill. Affordable insurance is a key piece of cost-of-living relief and would particularly benefit lower-income and regional Queenslanders, promoting equity. It would demonstrate government’s commitment to protecting citizens in an era of climate risk, likely yielding political dividends in trust and stability.
•Resilience and Mitigation: Improved insurance access via SGIO can be tied to better disaster resilience. This report recommends that a new SGIO incorporate incentives for policyholders to “build back better” and undertake risk mitigation (e.g. stronger roofs, house raising, flood defences)realestate.com.aurealestate.com.au. By making insurance more available and rewarding risk-reduction measures (as some recent reforms encouragerealestate.com.au), Queensland can reduce future disaster losses. In the long run, coupling insurance with mitigation will lower costs for both homeowners and the insurer, creating a virtuous cycle of resilience.
•Legal and Implementation Feasibility: Establishing an SGIO will require careful planning, but is legally and operationally feasible. The Queensland Government would need to legislate the creation of the insurer (as was done in 1916) and ensure compliance with national insurance regulations (APRA’s prudential standards). Initial capital funding and possibly a government guarantee for catastrophic events would be needed, which have implications for the state budget and credit rating. However,
experts note that governments have exited insurance in the past mainly to relieve budget pressure, not because it was unworkableinsurancenews.com.au. With robust governance, expert management, and prudent reinsurance (including use of the federal cyclone reinsurance poolrealestate.com.au), a modern SGIO could operate sustainably. This report provides a full implementation strategy, from conducting a detailed feasibility study through to phasing in operations and monitoring outcomes.
Recommendations: It is recommended that the Queensland Government move forward to reestablish a State Government Insurance Office (SGIO) as a key response to the home insurance crisis. The SGIO should be set up as a government-owned insurer dedicated to affordable coverage. It should prioritise regions and households most in need, coordinate with federal schemes (like the cyclone reinsurance pool) for risk sharing, and actively promote loss mitigation. A phased implementation is advised, starting with high-risk regions (e.g. cyclone and flood belts) and expanding statewide. In parallel, complementary measures such as removing state insurance stamp duties (which currently add ~9% to premiumsinsurancecouncil.com.auinsurancecouncil.com.au) and investing in flood defences (as called for by industryabc.net.auabc.net.au) should be pursued to tackle the root causes of rising premiums. By taking this dual approach – immediate relief via a state insurer and long-term risk reduction – Queensland can restore insurance affordability, protect its residents, and strengthen economic resilience against future disasters.