Whole Regions Of Australia Will Become Uninsurable; Industry Now Assuming 2C Rise "Locked In"
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While a flood may be costly thanks to the expensive recovery process that follows, the nightmare scenario is for a cyclone to slam into a heavily populated area in a region such as south-east Queensland. While the chance of this happening would have once been considered zero, climate change means the possibility can no longer be totally discounted.
And the cost of these events is mounting. Though it is too early to know the full cost of the current one-in-100-year flooding event, the Insurance Council of Australia has already declared a catastrophe for NSW and south-east Queensland. With more than 17,000 insurance claims filed as of Wednesday morning, an early industry estimate puts the total estimated damage across two states at $254.2m.
By contrast, the cost to just four insurers – Allianz, QBE Insurance, Suncorp and IAG – in the wake of the black summer bushfires was $721m. Meanwhile the industry as a whole lost $5.3bn paying out for damage caused by bushfire, flood and hailstorms during the first quarter of 2020. The scale of damage and the size of the loss incurred by IAG and Suncorp alone was so great the companies burned through their catastrophe allowances and had to draw on their reinsurance contracts – the insurance for insurers – prompting the world’s largest reinsurer, Swiss Re, to publicly lash the companies for consistently failing to predict the cost of natural disasters.
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“The customers bear it at the end of the day. As I said before, it’s been a particular concern of Allianz’s for some time that we already see natural-peril risks that result in premiums that customers can’t afford.” At the time, the moment was read as a frank statement of intent from the industry. While it had called for more mitigation work to be done to adapt to the effects of climate change, and for tax reform to lower the cost of premiums, within Australia there have been no public calls for the government to act to bring downward pressure on emissions. In fact, during that hearing, the industry largely accepted that a world 2C hotter on average was now locked in, a position outlined in IAG’s report on climate change. “A 2C target is therefore unlikely to be achieved and will therefore significantly increase the risk for catastrophic events, even compared to 1.5C warming,” the report said.
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https://www.theguardian.com/australia-news/2021/apr/02/fire-and-flood-whole-areas-of-australia-will-be-uninsurable
