Claims that climate change could see parts of the country become uninsurable are “scaremongering” that does little to help the country manage the environmental threat, the Insurance Council of Australia (ICA) said today.
The council’s strongly worded comments came amid new warnings that Australians living in areas prone to global warming-fuelled weather hazards face a future of having to do without essential home insurance coverage.
“ICA does not believe any part of Australia will become uninsurable, though risk-rating may mean high premiums for many property owners,” spokesman Campbell Fuller told insuranceNEWS.com.au.
“We don’t feel that scaremongering serves the best interests of the community. However, we do believe governments should play a more active role in informing each property owner about the specific risks they face.
“The predicted long-term impacts of climate change are a clear reminder to all levels of government that communities should be protected from the impact of known as well as anticipated extreme weather.
“This should be in the form of nation-building investments in permanent mitigation, incentives to improve the resilience of buildings in at-risk regions, better land-use planning, and stronger building codes.”
Consultancy Climate Risk said in a report issued earlier today that a growing number of homes will probably become uninsurable as climate change-linked weather extremes increase in frequency.
It says at least 850,000 residential addresses or nearly 10% of homes will fall into this category by 2100 – an increase of 220,000 from current figures.
“We are looking at the increased probability so it’s the existing risk, the baseline risk, but with increases in climate change as well,” Climate Risk Director of Science and Systems Karl Mallon told insuranceNEWS.com.au today.
The Reserve Bank of Australia yesterday echoed similar sentiments, warning that Australians face a future in which they may have to “make do” without insurance protection.
“Challenges for financial stability may arise from both physical and transition risks of climate change,” Deputy Governor Guy Debelle said in a speech.
“For example, insurers may face large, unanticipated payouts because of climate change-related property damage and business losses.
“In some cases businesses and households could lose access to insurance. Companies that generate significant pollution might face reputational damage or legal liability from their activities, and changes to regulation could cause previously valuable assets to become uneconomic.
“All of these consequences could precipitate sharp adjustments in asset prices, which would have consequences for financial stability.”
According to the Actuaries Institute, the number of extreme hot days exceeded historical levels during the recent spring and winter seasons.
The institute’s updated Climate Index showed parts of northern Queensland experienced more hot days than usual last spring while the southern regions had decreased winter rainfall.
“Based on the readings, we recognise that climate change is expected to have major environmental, economic and social impacts, and it poses a serious risk to the industries that actuaries advise,” the institute’s CEO Elayne Grace said today.
Launched last November, the index is designed to inform policymakers and business leaders the frequency of extreme weather and resulting impact on risk and the broader economy.