How Increased Natural Hazard Risk Is Impacting Insurance

Across Australia, the frequency and severity of natural hazards has continued to escalate in recent times. As this risk escalates, much of the nation is beginning to question how prepared we are to effectively manage the fallout of such disasters.

A Royal Commission hearing in September brought about suggestions that, when it comes to making natural hazard policy changes, now is the time to act. While the need for climate action has been brewing for some years, it’s now apparent that we have all but surpassed the tipping point.

The completed report from the royal commission is due to be released in late October. It’s expected to detail recommendations relating to numerous key factors involved in improving the nation’s current anticipatory capacity and recovery framework, including decision-making and accountability.

 

Natural Hazard Key Areas Of Concern

A key focus of this hearing, which was spread over four months, was reviewing public policy regarding resilience. In particular, this is an issue when it comes to emergency management, with Mark Crosweller, former head of the National Resilience Taskforce, stating that there does need to be some structural amendments to existing policies.

Improving the current knowledge base and data capabilities for managing natural hazard information is critical in making such findings more accessible and informing decisions and future planning. However, doing this will involve an enormous amount of time and work. This is largely because the data needs to be contemporary and, in many instances, recent and accurate data isn’t readily available. Further, certain information is yet to even exist, such as a national bushfire risk map, making its creation all the more difficult.

The frequency and extremity of many natural disasters is rapidly increasing. Over the last 20 years, parts of Sydney and areas north of Newcastle and near Wollongong have seen more large and giant hailstorms than previously anticipated. Such giant hail events have been so significant that they destroyed motor vehicles in affected locations, causing many to be written off.

IAG has also identified “connected extremes” and, this summer, some experts expect that, in addition to the ongoing pandemic, Australians will need to grapple with a major tropical cyclone. 

 

The Impact On Insurance

With the intensity and risk of natural disasters continues to rise across the country, the number of claims is increasing, and insurance prices are getting higher. As more relevant data becomes available to insurers, areas of high risk can be identified, and they can continue to provide premiums suitable for varying environments and circumstances.

For more information, or if this article has brought up any queries, please don’t hesitate to get in touch with your insurance advisor.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

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