Climate change is undeniably a politically sensitive issue. However, the Insurance Council of Australia (ICA) has warned that it poses a very real, persistent threat that, as evidenced by science, will significantly impact our modern way of life in years to come.
Individuals are becoming increasingly concerned about the impending effect climate change will have around the globe, sparking an abundance of detailed studies on the issue.
The Impact of Climate Change in Australia
At the core of the climate crisis is the stipulation that greater carbon emissions are causing temperatures to sore worldwide, which has been supported by robust data. The Australian climate has warmed by more than 1°C since 1910 and, while at first glance this may not appear to be particularly significant, scientific findings definitely bring such change into perspective.
“Scientific records over the past million years show that as periodic ice ages ended, global average temperatures rose a total of 4-7 degrees Celsius over the course of about 5,000 years.”
The ripple effect of such abnormal temperature fluctuations is being felt across the country with ecosystems such as the Great Barrier Reef already falling victim to the harrowing consequences. The reef is valued at over $57 billion, providing employment for over 64,000 people, but since 2016 about 30% of its coral has died. This catastrophe was caused by mass bleaching, an event that climate change made 175 times more likely.
Escalating average temperatures have also contributed to the growing threat of bushfires in Australia, with fire seasons becoming longer and increasingly dangerous due to harsh conditions.
The Implications of Climate Change on Insurance
It’s expected that by 2050 the total costs of natural disasters in Australia will almost double, reaching $39 billion. With this in mind, it comes as no surprise that certain high-risk areas are facing the very real possibility of being deemed uninsurable in the near future.
There are already about 350,000 properties across Australia that are considered uninsurable, and by 2100 it has been projected that this figure will grow to 720,000.
The Federal Government is being urged to increase their spending on disaster mitigation with Richard Ethoven, ICA President, suggesting they start contributing $200 million per year to the cause. However, the responsibility to introduce permanent, effective mitigation and resilience measures doesn’t rest purely on the Government.
If properties become uninsurable, insurance providers will be faced with the consequences of a declining market. For this reason, many believe that insurers ought to be doing what they can to lower carbon emissions, all the while developing maintainable policies that will be applicable in the foreseeable future.
For more information, or if you have any queries regarding the topics discussed in this article, please speak with your insurance advisor.
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