‘Perfect storm’: How much extreme weather is really costing Aussies
A new report has put a dollar figure on the impact of Australia’s droughts and flooding rains, with the situation expected to worsen as the world gets warmer.
Source: AAP
A “perfect storm” of more frequent natural disasters, poor planning decisions and high inflation is driving up insurance costs for all Australians, but particularly the nation’s most vulnerable households, a report warns.
Extreme weather events such as floods, storms, bushfires and earthquakes cost Australians about $4.5 billion annually, the research from the Insurance Council shows.
It also warns climate change is making natural disasters more expensive every year.
“The acceleration is undeniable,” the Insurance Catastrophe Resilience Report, released on Tuesday, says.
Council chief executive Andrew Hall said high inflation had pushed up the cost of repairing homes and businesses, making the recovery from major disasters more expensive.
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“Australia’s had the perfect storm of insurance challenges,” he said.
Hall said the impact of extreme weather, particularly flooding, was often concentrated on disadvantaged households.
“When we look at the homes that are most at risk of flood, they’re often the cheapest,” he said.
“People who live there are living in homes they can afford.
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“The problem is for those people, they’re almost committed to intergenerational poverty because their main asset, their home, is one that is in a high risk location and can be destroyed as frequently as every five to 10 years.”
The report shows that of the 242,000 homes facing severe to extreme flood risk, more than three-quarters are not insured against floods.
It found 70 per cent were also in areas where the average income was below the national median, while less than 4 per cent were in the nation’s wealthiest areas.
On average, Australia has ranked second highest for financial losses from severe weather in the past few decades, beaten only by the US.
There was a 25 per cent drop in claims from natural disasters last financial year compared to the one before, despite ex-Tropical Cyclone Alfred and major floods inflicting severe damage.
The storm caused $1.4 billion worth of losses, inflicting so much damage it wiped about a quarter of a per cent off the nation’s economic growth.
Insurers have long called for changes to help Australians deal with natural disasters.
The report recommends the government establish a $30 billion flood defence fund, for new infrastructure to protect homes and businesses from inundation, and to buy back at-risk properties.
It also suggested changes to planning decisions to prevent new homes being built in harm’s way as Australia’s population increases.
