Scott Guse Warns of Three Housing Crisis Insurance Risks

Australian home insurers are facing a housing crisis of a different kind as claims rise from burst flexi hoses, homes built close together and battery-related fires. Scott Guse, a KPMG partner with deep expertise in the insurance sector, said there is "a whole raft of other events continuing to escalate".

The pressure is coming alongside natural catastrophes, which remain the main driver of home insurance losses in Australia. Guse said the newer risks are showing up in ordinary homes, not just in weather events, and that some hose claims can be declined when there are visible signs of age, rust or swelling.

Scott Guse on flexi hoses

Guse said most flexible hoses were installed in new houses about 25 years ago and were built to last around 15 years. That gap is now showing up in claims.

"So you're starting to see a number of them burst, and when they do, water just runs and floods your kitchen or bathroom," he said. A burst flexi hose can also damage cabinetry, flooring, walls and ceilings, and Guse told brokers and clients: "Get your flexi hoses checked, because a burst can cause a hell of a lot of disruption and damage."

Dense housing and fire spread

The federal government wants to build more than one million new homes over five years, and new suburban developments are increasingly packing homes onto narrow lots with minimal separation between structures. Guse said that layout is changing how fire losses appear in claims data.

"You're also finding houses built closer and closer together, such that when a fire happens it can very easily jump from one house to the next," he said. He added, "We've seen a more noticeable increase in fires jumping from one house to the next due to close proximity."

Lithium-ion cells in homes

Electric vehicles, e-bikes, solar storage systems and consumer electronics have flooded Australian homes with lithium-ion cells, adding another source of household fire claims. The effect is different from a cyclone or flood claim, but insurers are treating it as part of the same rise in non-catastrophe losses that can hit premiums and claims handling.

For homeowners, the immediate step is straightforward: check aging flexi hoses at renewal time and pay closer attention to how much separation exists between neighboring houses, because both factors are now feeding claims that were once less visible than storm damage.