Uninsurable nation?

Australia remains at the centre of the climate change debate, with the challenges of insuring the country considerable.

The reason that the country is making the climate headlines is the election of Anthony Albanese as the new Prime Minister, having won the weekend election with the opposition centre-left Labor Party.

Crucially, Albanese said in the wake of the election that Australia could become a renewable energy superpower. Speaking to the BBC shortly after his election victory, Albanese said: “We have an opportunity now to end the climate wars in Australia. Australian businesses know that good action on climate change is good for jobs and good for our economy, and I want to join the global effort.”

Albanese, who will be heading Australia’s first Labor government in almost a decade, also promised to adopt more ambitious emissions targets. However, he has so far refused calls to phase out coal use or to block the opening of new coal mines.

The issue is hugely significant for a country which has been hard hit by wildfires and rising temperatures in recent years, but whose economy has also been strongly geared towards mining of fossil fuels.

The Australian climate challenge

Indeed, the scale of the problem facing the country, and the problem facing the (re)insurance sector, should not be underestimated, and has been laid bare in a recent hard-hitting report by the Climate Council – Uninsurable Nation: Australia’s Most Climate Vulnerable Places.

According to the report, climate change, driven by the burning of coal, oil and gas is supercharging our weather systems. However, it adds, while climate change affects all Australians, the risks are not shared equally. In the most extreme instances, areas may become uninhabitable.

It also suggests that insurance will become increasingly unaffordable or unavailable in large parts of Australia due to worsening extreme weather, outlining the top 20 most at-risk federal electorates to climate change-related extreme weather events.

Key findings:

Climate change is creating an insurability crisis in Australia due to worsening extreme weather and sky-rocketing insurance premiums
Worsening extreme weather means increased costs of maintenance, repair and replacement to properties – our homes, workplaces and commercial buildings. As the risk of being affected by extreme weather events is increasing, insurers are raising premiums to cover the increased cost of claims and reinsurance.

The Climate Council has produced a ranking of the top 10 most at risk electorates from climate change and extreme weather events (covering bushfires, extreme wind and different types of flooding), based on the percentage of ‘high risk’ properties in each federal electorate across Australia.

Across Australia approximately 520,940 properties, or one in every 25, will be ‘high risk’, having annual damage costs from extreme weather and climate change that make them effectively uninsurable by 2030.  In addition, 9% of properties (1 in 11) will reach the ‘medium risk’ classification by 2030, with annual damage costs that equate to 0.2-1% of the property replacement cost. These properties are at risk of becoming underinsured.

Climate change affects all Australians, but some federal electorates face far greater risks than others

The top 10 most at-risk federal electorates by 2030 are:
> 1. Nicholls (Vic)
> 2. Richmond (NSW)
> 3. Maranoa (QLD)
> 4. Moncrieff (QLD),
> 5. Wright (QLD),
> 6. Brisbane (QLD),
> 7. Griffith (QLD),
> 8. Indi (Vic)
> 9. Page (NSW) and
> 10. Hindmarsh (SA).

In these at-risk electorates, 15% of properties (165,646) or around one in every seven properties will be uninsurable this decade.

In the electorate of Nicholls in Victoria, which covers the Local Government Areas (LGAs) of Campaspe, Greater Shepparton, Moira, and parts of Strathbogie and Mitchell, 26.5% of properties will be uninsurable by 2030. In the LGA of Greater Shepparton, it is as many as half (56% of properties), and almost 90% in the locality of Shepparton.

By 2030, 40 federal electorates across Australia will have 4% of properties classified as ‘high risk. Eighteen of these electorates (or 45%) are in Queensland. The top five most at-risk electorates in Queensland are: Maranoa, Moncrieff, Wright, Brisbane and Griffith.

The percentage of properties that will be uninsurable by 2030 in each state and territory is 6.5% in Queensland; 3.3% in NSW; 3.2% in South Australia; 2.6% in Victoria; 2.5% in the Northern Territory; 2.4% in Western Australia; 2% in Tasmania and 1.3% in the ACT.

Riverine floods are the most costly disaster in Australia

Riverine flooding poses the biggest risk to properties, according to the report. Of the properties classified as uninsurable by 2030, 80% of that risk is due to riverine flooding.

Bushfires and surface water flooding (sometimes called flash flooding) are the other major worsening hazards causing properties to become uninsurable by 2030.

The five most at-risk electorates for riverine flooding are: Nicholls in Victoria, Richmond in New South Wales (including the towns of Ballina, Bangalow, Brunswick Heads, Byron Bay, Hastings Point, Kingscliff, Lennox Head, Mullumbimby, and Tweed Heads), and Maranoa (in rural southwestern Queensland, including the towns of Roma, Stanthorpe, Winton and Warwick), Brisbane, and Moncrieff in Queensland (part of the Gold Coast).

Across Australia, 2.5% of properties (360,691 properties) will be at ‘high risk’ of riverine flooding by 2030, with a further 372,684 at ‘medium risk’ of riverine flooding.

Decisions and actions over this next term of government will influence the future impacts of climate change for generations to come.

The Climate Council says that, unfortunately over the last eight years, the Federal government has failed to meaningfully tackle climate change or prepare Australians for worsening extreme weather. It says there is also an urgent need to upscale investment in national adaptation and disaster risk reduction funding to help Australians better prepare for worsening extreme weather events.

access the full report click here.

Across Australia approximately 520,940 properties, or one in every 25, will be ‘high risk’, having annual damage costs from extreme weather and climate change that make them effectively uninsurable by 2030. 

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