In Los Angeles, a modern home standing relatively untouched, the sole survivor in a street of fire-ravaged homes, could point the way for how building design will determine which Australian properties will be insurable in our climate-changed future. As the unprecedented January wildfires destroy whole neighbourhoods, Australian developers face a harrowing challenge: build differently or watch 5.6 million Australian properties worth $4.66 trillion become effectively uninsurable by decade’s end. According to Domain research, that’s the number of Australian homes currently facing bushfire risk and facing that fate. Climate Council of Australia (ICA) chief executive Amanda McKenzie warns that by the ends of this decade, one in 25 properties will be uninsurable—a figure likely to worsen as high-risk areas expand and disaster frequency increases. Bushfire losses have risen from an average of $220 million annually over the past 30 years to $560 million in the past five years, according to the Insurance Council of Australia. Flooding costs have escalated from $620 million to $2.2 billion in the same period. Point Data research identifies New South Wales as particularly vulnerable, with 284,452 buildings facing fire danger. The state’s highest risk areas include Hawkesbury with 13,667 properties at risk, Shoalhaven, 13,342; Tamworth, 11,506; and Queanbeyan-Palerang with 10,630 properties facing significant fire danger. Victoria follows with 176,329 buildings at risk, including more than 24,000 in the Yarra Ranges. Other high-risk areas in the state include Mornington Peninsula with 11,585 properties, Nillumbik Shire, 9520 and Gippsland with 7800. Queensland faces similar challenges. The Sunshine Coast has 24,296 properties at risk, the Gold Coast, 14,335; Mackay, 5984; and Brisbane with 5851 properties facing fire danger. In South Australia, the highest risk areas are Adelaide Hills, Kangaroo Island, Mount Barker, Mitcham, and Victor Harbor. ▲ Bushfires rage in hills behind properties in New South Wales. Many view bushfires as nature’s intrusion into human spaces, but the reality is that we’re steadily pushing into fire-prone areas, says Flame Security International managing director Justin Rooney. “Urban encroachment is fundamentally driving our bushfire crisis,” Rooney says. A 2021 report revealed a 30 per cent expansion in cleared land over five years, with South-East Queensland losing up to 6 per cent of bushland to urban development. “So, we need to shift from fighting fires to coexisting with them,” Rooney says. Analysis based on federal electorates reveals concerning trends for insurability by 2030. The situation is critical in Victoria’s federal electorate of Nichols, where 25,000 properties—27.4 per cent of homes—could be effectively uninsurable by 2030. Similar challenges face Richmond in NSW with 22,000 properties (20 per cent) at risk, and Queensland’s Maranoa, where 19,550 properties (14.8 per cent) face insurability issues. Financial Rights Legal Centre chief executive officer Karen Cox says there are “extreme cases ... in Lismore [in northern NSW] where people are looking at premiums of $15,000 to $25,000 for flood insurance”. “That is not affordable for anybody, or very few people at all,” Cox says. ▲ The LA fires have put into sharper focus the crisis facing Australian properties in high-risk areas. As the LA fire event continues, its full financial impact remains unknown. Equally how that will affect global reinsurance market remains unknown, a Suncorp spokeswoman tells The Urban Developer. Suncorp, a major player in the Australian insurance landscape, says it “has long advocated for measures to mitigate the impact of extreme weather, particularly for customers in areas at risk of bushfire, flood and cyclone”. “This includes greater investment in public infrastructure, support for homeowners to make their homes more resilient, and improvements in where and how we build in high-risk locations,” the spokeswoman says. Emerging research suggests building design modifications could offer solutions. Industry sources say many destroyed properties in the LA fires used traditional timber frame construction methods with plywood walls and bitumen-based roofing—materials chosen primarily for earthquake resilience rather than fire protection. According to University of Lisbon research, fireproofing new developments adds less than 5 per cent to construction costs, while retrofitting existing properties ranges from 5 to 15 per cent of total value. The effectiveness of these measures has been demonstrated in recent disasters. During the Maui wildfires, the university’s research found homes constructed with fire-resistant materials and updated building codes had significantly higher survival rates. Simple modifications, such as replacing asphalt roofing with metal alternatives, proved crucial in protecting properties. Rooney would like to see a “comprehensive approach to fire protection that starts at the design phase”. “Emerging technologies are making this transition more feasible and cost-effective,” he says. ▲ Houses built to structural codes for withstanding earthquakes are not necessarily fire-resilient, say industry insiders. He points to FIRECOAT paint, developed by UNSW engineers, which creates a protective char layer when exposed to heat, meeting stringent BAL 40 standards while remaining relatively affordable. Ember-proof membranes for windows and specialised gutter protection systems complement these measures, he says. “These aren’t just add-on features,” Rooney says. “They represent a fundamental shift in how we approach building in fire-prone areas, moving from reactive emergency response to proactive protection.” Design defeats disaster One standout example of how building design and materials significantly influence property survival rates has emerged from the Los Angeles wildfires. Architect Greg Chasen, whose client’s home survived the Pacific Palisades fire as neighbouring properties burned, points to specific design elements that made a difference. “The walls were fire-rated, and the finishes were either cement, stucco or a low-flame-spread wood,” Chasen told media. The home has tempered glass windows, non-combustible roofing and concrete perimeter walls—all of which contributed to its survival. Research from the University of Lisbon’s Civil Engineering Research and Innovation for Sustainability Unit suggests focusing on three key areas: exterior facade design, firebrand protection, and material selection. The research found that 70 per cent of houses burn not from direct flame contact but from firebrand accumulation—airborne burning particles that can travel up to two kilometres. ▲ A house in the Okanogan-Wenatchee National Forest in the US remained intact as fires ripped through the region in 2022. These building standards may have direct implications for insurability. As insurers assess risk in fire-prone areas, properties incorporating such protective measures could maintain coverage while others face mounting challenges. Insurance industry expert John Trowbridge, speaking at the 2023 ASIC Annual Forum about the growing insurance protection gap, highlighted historical patterns of under-insurance in Australia. The protection gap is the difference between total economic losses from natural disasters and the portion covered by insurance. Under-insurance ‘big issue’  “The average under-insurance for the Canberra 2003 bushfires and the Victoria Black Saturday bushfires was about 40 per cent so it’s a big issue here,” Towbridge says. “We appear as a country more prone to disasters in large residential areas than others. With climate change, this is a really expensive problem.” ICA general manager Alix Pearce says global reinsurer Swiss Re estimated a third of the almost $60 billion cost of natural disasters in Australia from 2014-2023 fell into the protection gap—highlighting the urgent need for industry-wide solutions. “It is still too early to predict whether there will be cost implications for local insurance markets,” an ICA spokesperson tells The Urban Developer . “Without increased funding to make Australian homes, businesses and communities more resilient to worsening extreme weather, risks will continue to increase. “Development in high-risk areas requires a fundamental rethink of building design and materials. While initial construction costs may increase, the long-term benefits of insurability and property protection offer compelling returns on investment.” As extreme weather events intensify, the challenge for developers lies in balancing affordability with resilience. Research suggests investing in fire-resistant design at the development stage could be the key to maintaining insurability in high-risk areas and, ultimately, the viability of future developments in these regions. “When it comes to future development, we must stop making decisions that lock in more risk,” the ICA spokesperson says. “This includes building properties to stronger codes and standards so that they can last a lifetime, and potentially banning development in very high-risk parts of the country, where we know risk can’t be mitigated.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.
