The Insurance Council of Australia (ICA) has released a detailed report revealing that the economic impact of extreme weather events in Australia has tripled over the past three decades. The report, which covers 30 years of data, shows a significant increase in the financial toll of natural disasters, which is creating challenges for both the insurance industry and the broader economy.

Key Findings

The report highlights an increase in the frequency and intensity of extreme weather events—such as bushfires, floods, and cyclones—over recent years. According to the report, the cost of these disasters, which includes damages to infrastructure, homes, and businesses, has risen from an estimated $10 billion per decade in the 1990s to over $30 billion in the past ten years.

ICA CEO Andrew Hall emphasized the growing threat posed by floods, noting that it is “Australia’s most costly natural peril,” with an estimated 1.2 million properties facing some level of flood risk. Hall pointed out that “around 230,000 of these have a 1 in 20 chance of flooding each year,” with many other properties facing similarly high risks. He stressed the need for enhanced efforts to manage these risks, stating, “De-risking is the only sustainable way to reduce the pressure on premiums and close the protection gap.”

The ICA attributes the rise in costs to a combination of factors, including climate change, urbanization, and insufficient investment in resilient infrastructure. The report calls for action to mitigate these risks, warning that without intervention, the economic impact could continue to grow.

Economic and Social Implications

The report discusses the broader economic consequences of these extreme weather events. In addition to immediate financial losses, the report identifies long-term impacts such as reduced productivity, increased insurance premiums, and potential declines in property values in high-risk areas.

Socially, the report highlights the effects on communities, particularly those in regional and rural areas, which are often more vulnerable to natural disasters. The ICA suggests that a coordinated response involving government, industry, and local communities is necessary to improve preparedness and resilience.

Industry Response

In response to the report’s findings, the ICA is calling on both federal and state governments to prioritize investment in disaster mitigation strategies. This includes strengthening building codes, improving early warning systems, and promoting risk-informed land-use planning. The insurance industry is also encouraged to develop more innovative products and services to help Australians manage the growing risks associated with extreme weather.

Rob Whelan, CEO of the ICA, noted, “The data shows that the impact of extreme weather on our economy is growing, and action is needed to protect our communities and livelihoods. This report highlights the importance of collaboration across all sectors to build a more resilient Australia.”

Looking Ahead

The ICA’s report concludes with a focus on public awareness and education regarding the risks posed by extreme weather. It encourages individuals to take proactive steps in safeguarding their homes and businesses.

As Australia continues to navigate the challenges of a changing climate, the findings of this report emphasize the need for ongoing efforts to address the economic and social impacts of extreme weather.

The Insurance Catastrophe Resilience Report 2023-24 will be launched at Parliament House in Canberra tonight, providing a platform for policymakers and industry stakeholders to discuss the findings and explore strategies for bolstering Australia’s resilience to extreme weather events.

Source: http://www.insurancecouncil.com.au/CatastropheReport

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