Queensland councils explore a community insurance mutual as flood-prone towns face soaring premiums

Premium shock in a river town

In St George, a country town in Queensland’s south-west, daily life is closely tied to the Balonne River. The river’s banks are a gathering place for family picnics and fishing competitions, and the water feeds dams that support the region’s agricultural activity. A sign near the river captures the area’s extremes: a landscape shaped by drought and flooding rain.

That same river connection also underscores a growing financial strain for residents. Flood risk in and around St George has been linked to steep annual increases in insurance premiums—figures that locals say have become difficult to absorb. Some residents report premium rises approaching 500 per cent, turning what was once a manageable household cost into a major budget item.

For Adam Osborne, a St George resident, the experience of seeking home and contents insurance has been stark. He said one quote he received ranged from $23,000 a year at the lower end to more than $60,000 annually at the upper end. He described the highest figure as effectively “a wage,” adding that the monthly repayment would have been more than his pay cheque.

Osborne said his own costs have climbed significantly in recent years. He paid $7,000 in 2022, and after working with a broker he secured insurance for $14,000 to cover his home and contents. Even with that outcome, the jump illustrates the scale of change that many households in the region say they are facing.

A wider pattern of sharp increases

Osborne’s story is not being treated as an isolated case. Balonne Mayor Samantha O’Toole said she has compiled dozens of accounts of premiums spiking above 100 per cent. The issue, she argues, is affecting residents and businesses across a broad stretch of south-west Queensland—an area that is vulnerable to both drought and flooding.

In evidence provided to a 2024 Senate inquiry examining the impact of climate risk on insurance, the Southwest Regional Organisation of Councils (SWROC) pointed to cases where premiums rose by more than 400 per cent. One example cited was a Thargomindah resident whose premium increased from less than $4,000 to almost $20,000 in a year.

While rising premiums have been a national concern, the scale and speed described in these accounts has led local leaders to argue that regional communities face a particularly acute challenge. O’Toole said that although she understood premiums were rising broadly, she believed there had been “a bit of price gouging in the market.” In her view, there was “no justification for a 100 per cent year-on-year increase in insurance premiums in the south-west.”

Six councils consider becoming insurers themselves

Against this backdrop, six Queensland councils have decided to explore a different approach: creating their own insurance mutual. The idea is being advanced through SWROC, a group that includes the Balonne, Murweh, Paroo, Bulloo, Maranoa and Quilpie shires.

O’Toole, who chairs SWROC, said the councils are working on a “community protection mutual” designed to help residents and businesses bypass major insurers. The concept of a mutual is not to maximise profit, she said, but to provide equity across a membership group so that people can access “affordable and reasonable insurance.”

To develop the proposal, SWROC has engaged risk analyst and international insurance broker JLT. A feasibility study is expected within weeks. O’Toole said viability would depend on broad participation: “We need the majority of the community to participate if the mutual is going to be viable.”

Frustration with existing discussions

The councils’ move comes after what O’Toole described as unproductive engagement with the Insurance Council of Australia (ICA). She said SWROC had held multiple meetings with the ICA but felt the discussions had not delivered progress. “It’s a bit like banging your head against the wall,” she said.

The ICA, in a statement, said it was working with the Queensland Reconstruction Authority and local councils to “develop practical solutions” to reduce insurance costs in south-west Queensland. The ICA spokesperson also said premiums were under pressure due to a 40 per cent increase in construction costs since 2020.

At the same time, the ICA emphasised that premium pricing is ultimately a matter for individual insurers, even as industry bodies and government agencies participate in working groups and broader coordination efforts.

When cover becomes hard to find

Beyond rising prices, some residents say access to insurance itself is becoming uncertain. In St George, insurers have reportedly told some households they will no longer cover the area. That shift can leave residents facing not just higher premiums but fewer options—an issue that can be especially stressful in communities where flood risk is a known factor.

Jan Dimond, another St George resident, said her premium rose four-fold over five years, prompting her to shop around. When she sought quotes from other companies, she said she was told they could not insure her because the area had been “blanketed as a flood zone.”

For households in this position, the challenge is twofold: managing the cost of cover if it is available, and navigating the possibility that cover may be refused altogether. These experiences help explain why local councils are looking at structural alternatives rather than relying solely on incremental changes in pricing.

The debate over levees and risk reduction

Flood protection infrastructure has become a key point of contention in the region’s insurance debate. Towns including St George, Charleville and Roma have flood levees intended to prevent swollen waterways from spilling into populated areas. In St George, a levee was built in 2014 after major flooding in earlier years, including three consecutive years of flooding.

O’Toole said councils have long been frustrated that reduced flood risk through such measures is not being reflected in lower premiums. From the councils’ perspective, local investment in mitigation should translate into more favourable pricing outcomes for households and businesses.

The ICA responded that risk reduction measures such as levees are taken into account when pricing premiums. The industry body said insurers rely on comprehensive risk data to price premiums accurately and are supporting local councils to conduct up-to-date flood studies and implement appropriate risk reduction measures.

The ICA also said there is a working group between insurers and the Queensland Reconstruction Authority to “identify climate mitigation activities and targeted investment that will strengthen flood resilience and put downward pressure on premiums.” However, it reiterated that premium pricing decisions sit with individual insurers.

Expert view: why mutuals appeal—and what makes them difficult

Internationally recognised insurance expert Professor Paula Jarzabkowski said the insurance industry needs to be “reinvented” as climate change and extreme weather increase risk. In her view, mutualisation and solidarity are approaches that governments and communities may need to consider more seriously.

“Mutualisation and solidarity are things we are going to have to consider as local councils, as states, as a nation, so that we will have to hedge each other against risk,” she said. Jarzabkowski also warned that there is “no bright future where the market will go back to what it was without significant intervention, financially subsidising people, and physically changing the risk profile.”

At the same time, she cautioned that a local mutual fund can face structural limitations. One of the central challenges she identified is diversification. Traditional insurers can keep prices lower by spreading risk across multiple portfolios—such as flood and fire—across different geographies. A local government-led mutual, focused on a region exposed to similar hazards, may struggle to replicate that spread.

“They’re not going to be able to push the price down because they’re facing the same type of risk and the same level of risk,” she said, adding that on its own, the concept may not fully solve the broader problem.

What SWROC is trying to achieve

Despite the cautions, SWROC’s plan reflects an attempt to respond to immediate community pressure: premiums that have climbed rapidly, and in some cases, difficulty obtaining cover. The councils’ proposal is framed as a practical tool to improve affordability and access for residents and businesses who feel priced out of the mainstream market.

Supporters of the mutual approach argue that a community-based model could prioritise equity across members rather than profitability. The feasibility work being undertaken with JLT is expected to test whether such a model can operate sustainably, and what level of participation would be required to make it viable.

For residents like Osborne, the proposal is being watched closely. He said he appreciates what the councils are trying to do and hopes the mutual, once operating, will lower his premiums. “We’re people in the bush just doing our best, and it’s just another hurdle for us,” he said.

Key points raised by residents, councils and the industry

• Residents in south-west Queensland have reported insurance premium increases of more than 100 per cent, with some accounts suggesting rises of more than 400 per cent and quotes reaching tens of thousands of dollars a year.
• Six councils—Balonne, Murweh, Paroo, Bulloo, Maranoa and Quilpie—through SWROC are investigating a community insurance mutual intended to improve affordability and access.
• SWROC has engaged JLT to develop a proposal, with a feasibility study expected within weeks; council leaders say broad community participation would be needed for viability.
• The Insurance Council of Australia says it is working with the Queensland Reconstruction Authority and councils on practical solutions, noting premiums are under pressure and pointing to a 40 per cent increase in construction costs since 2020.
• There is ongoing debate over how flood mitigation infrastructure, including levees, should affect premiums; councils argue reduced risk is not adequately reflected, while the ICA says such measures are taken into account.
• Expert commentary suggests mutualisation may be part of the future response to escalating climate-related risk, but warns that local mutuals can struggle with diversification compared with large insurers.

An uncertain path, driven by urgent local pressure

The situation in St George and surrounding shires highlights how climate-linked risk, construction cost pressures, and insurance market dynamics can converge in ways that feel abrupt and destabilising for households. For some, the issue is no longer a marginal increase but a shift large enough to reshape decisions about where to live, how to protect assets, and whether insurance remains attainable.

SWROC’s mutual proposal is still in development, and its feasibility study will be central to determining what it could realistically deliver. But the move itself signals a broader point: in regions where residents describe premiums rising beyond reach, local governments are increasingly being pushed to consider solutions that sit outside the traditional insurance relationship between consumer and major insurer.

Whether a community protection mutual can deliver meaningful relief, or whether it becomes one component among several interventions, the councils’ initiative reflects a search for workable options in a market that many residents say no longer feels designed for them.