Insurance industry urged to heed climate change warnings

Chris Rodd, Australia’s representative on the international law association’s Presidential Council (AIDA) has stated that international insurers could abandon Australia if loss ratios spiral as a result of climate change and that the country needs to “wake up” to its level of exposure.

Mr Rodd said that Australia has already seen crop failures, more bushfires and fish deaths in the Murray-Darling Basin and that things will get worse.

He further added that the high uptake of insurance in a highly regulated market attracts international players but if loss ratios climb because of climate change, they may abandon the market and that will intensify the problems. He says that governments should reduce taxes on insurance and consider other models, like New Zealand’s Earthquake Commission (EQC) as New Zealand knows the insurance market can’t fully indemnify it for earthquakes, so EQC is a collaborative partnership with government and the insurance industry.

Meanwhile, a report recently released by the Actuaries Institute says global warming could see heatwaves which kill more Australians than any other natural disaster and triple in frequency and last longer by 2060 with the potential of death by heatwaves rising by 12% among over 65’s by 2060-2080 in some regions.

The Institute says that more frequent, longer and hotter days will drive a significant increase in mortality, with Australia’s ageing population amplifying the number of people who will die as a result of climate change.

AIDA’s CEO Dr Richard Thornton said that the signs for the upcoming fire season are concerning following fires in Queensland and NSW which have been declared an insurance catastrophe and that the Queensland blazes were within the expected fire season but were more severe than expected.