Climate change could lead to parts of the country becoming uninsurable, the Insurance Council of Australia (ICA) has warned.
ICA President Richard Enthoven told the National Insurance Brokers Association Convention on the Gold Coast that “this issue is real and it is with us today”.
He says while climate change is “politically sensitive”, insurance industry evidence backs up the science.
“It is absolutely clear that robust industry data on the impact of weather losses aligns with climate science,” he said.
“Evidence abounds in support of claims our planet is warming because of increased carbon emissions.”
Unless urgent action is taken, the future could be bleak for the most exposed regions.
“Changing weather systems may make certain regions more exposed to storm, flood or bushfire, thereby potentially making parts of Australia uninsurable.”
Mr Enthoven urged the Federal Government to heed Productivity Commission recommendations to increase spending on disaster mitigation to $200 million a year, matched by states and territories.
“The return on this investment is excellent and when it is done effectively, as in the case of Roma. The uninsurable becomes insurable again and insurance prices fall.”
Director of Science at Climate Risk Karl Mallon welcomes Mr Enthoven’s comments.
Earlier this year ICA accused the climate research group of “scaremongering” after it published research indicating that almost 10% of Australian dwellings could be uninsurable by 2100.
“We agree that there has to be a focus on mitigation measures, and we welcome the comments on uninsurable properties,” Dr Mallon told insuranceNEWS.com.au.
Dr Mallon says the insurance industry can have a direct impact by rewarding customers for private mitigation works.
“It’s not just about governments. Insurers need to price policies not just on exposure but on resilience measures.
“The Suncorp initiative in Far North Queensland is exactly what we need to see. It could create a market driver for resilience.”
Dr Mallon also believes insurers should actively campaign for carbon emission reductions.
“If climate change is going to make properties uninsurable then insurers will not have a market,” he said.
“They can’t sell something that nobody can afford to buy. The insurance industry is critical, we really need it, and unmitigated climate change is an existential risk.
“Insurers should be the loudest advocates for a low carbon economy.”
Source – Insurance News Magazine 16th October 2019