Insurance Council of Australia

Climate change

Buildings need to be made more resilient to cyclones

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Buildings need to be made more resilient to cyclones

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News release

Thursday, 2 December 2021

A new report released today by the Insurance Council of Australia (ICA) has found that Australia’s houses are not resilient to tropical cyclone hazards, which are expected to become more severe as the climate changes.

Prepared for the ICA by James Cook University Cyclone Testing Station in association with Risk Frontiers, the Tropical Cyclones and Future Risks report outlines the changes required to building codes and construction standards to improve the cyclone resilience of new homes, and calls for greater investment in the retrofitting of old homes to protect property and lives.

The insurance claims cost for tropical cyclones since 1967 stands at $23 billion, and Cyclone Tracy remains Australia’s costliest natural disaster with a $5.5 billion insurance bill (figs normalised to 2017 values).

The report draws on industry-wide policy and claims data from recent tropical cyclones in North Queensland, with a combined claims cost of $3.83 billion, and incorporates the damage report from Western Australia’s Tropical Cyclone Seroja earlier this year.

It finds that unless significant changes are made to both the design method and criteria for new houses the impact and losses from these events in Australian communities will only increase from an already high base.

A key recommendation of the report is that Australia’s National Construction Code considers resilience in all new property construction to reduce the damage, loss and disruption to communities caused by cyclones.

The report also recommends that federal and state governments support the development and expansion of household resilience schemes, such as the now-defunct North Queensland Household Resilience Program, which can help to reduce insurance premiums and better protect householders and communities.

The report is the second in the ICA’s Climate Change Impact Series, and follows a report released last month on the impact of actions of the sea. The final report in the series on flood impacts will be released in coming weeks.

Quote attributable to ICA CEO Andrew Hall:

At present no region in Australia is uninsurable, however if the severity of extreme weather events increases as predicted it is possible some regions may become difficult to insure in the future.

Australia’s modern houses are not resilient to the tropical cyclone hazard of today, and the National Construction Code must consider resilience for all new property construction if we are to keep all of Australia insurable.

Implementation of stronger building codes and retrofitting programs, improved land-use planning, and permanent physical mitigation measures, where necessary, will be key to ensuring an insurable Australia.

Useful links

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icon Climate Change Impact Series: Tropical Cyclones and Future Risks

New report finds $30B needed to protect coastal communities

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New report finds $30B needed to protect coastal communities

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News release

Wednesday, 17 November 2021

A new report released today by the Insurance Council of Australia (ICA) estimates that Australian Governments will need to invest $30 billion in large scale coastal protection and adaptation projects over the next 50 years, as climate change makes coastal communities, property, and infrastructure increasingly vulnerable.

Climate change is driving rising sea levels and exacerbating coastal hazards known as ‘actions of the sea’ such as tidal inundation, coastal and estuarine inundation, coastal erosion, and shoreline movement.

The report, prepared for the ICA by Baird Australia, has found that as these events increase in frequency and intensity, a growing number of exposed properties in Australia will become uninhabitable.

The June 2016 storm that eroded the beach and private land on Sydney’s Northern Beaches is a stark example of this phenomena, with the almost completed mitigating infrastructure costing the local government and homeowners an estimated $25 million.

Insurance cover for actions of the sea is generally not available because of the inherent risks and is further constrained because of the growing risks from climate change impacts.

With insurance largely unavailable, the report recommends building greater protections for communities exposed to actions of the sea through three areas of activity and investment:

  • Investment in coastal protection infrastructure where these can be shown to be economically and environmentally feasible
  • Improved and coordinated data collection by local, state and federal governments to build a comprehensive picture of the scale of the problem
  • Land use planning that considers actions of the sea, including in some cases making difficult decisions about the long-term viability of existing communities or property

The estimated $30 billion investment in large scale coastal protection and adaptation projects over the next 50 years represents just 1.2 per cent of the average yearly infrastructure spending by all local, state and federal governments.

The report finds that with this modest investment significant returns can be realised through avoided damage and financial loss for individuals and avoided community economic loss due to disruption.

However, the Baird report finds there are limits to mitigation and in some cases adaptive management and planned retreat from coastal hazard zones may be the best long-term community option.

The report recommends urgent action by federal and state governments to build a coastal hazard information database to measure and monitor actions of the sea as sea levels rise.

Quote attributable to ICA CEO Andrew Hall:

Legacy planning decisions by Australian governments have left some coastal communities, homes and infrastructure highly vulnerable to actions of the sea like tidal inundation and coastal erosion.

It’s estimated that over the next 50 years governments will need to invest at least $30 billion in large scale coastal protection and adaptation projects as climate change makes actions of the sea worse.

Insurers are generally not able to cover ‘actions of the sea’ because of the nature of the risk, but we can improve protections for communities and property owners by raising awareness of the risks, improving data and understanding, and advocating for investment in mitigation and adaptation projects.

The insurance industry stands ready to collaborate with governments to share our risk intelligence to help mitigate these growing challenges, for example working together to set robust land planning and building codes which play a critical role in reducing risk to property holders and enabling affordable insurance.

The Actions of the Sea summary report is available at Climate Change Impact Series: Actions of the Sea and Future Risks (insurancecouncil.com.au)

 

Useful links

icon Media release
icon Climate Change Impact Series: Actions of the Sea and Future Risks

Actions of the Sea Vulnerability Study

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Actions of the Sea Vulnerability Study

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Following the release of the 'Climate Change Impact Series: Actions of the Sea and Future Risks' report,  a critical milestone of this project has now been met. 

Many thanks to our Climate Change Action Committee and Data and Knowledge Committee who made this work possible.

Top takeaways from the report

  1. Climate change is driving rising sea levels and exacerbating coastal hazards known as “Actions of the Sea” such as coastal inundation, erosion, and recession.
  2. Significant additional investment will be required to mitigate the risks of coastal inundation and sea level rise.
  3. Urgent action is needed at all levels of government, in collaboration with industry, to build a national picture of coastal hazard risks and how to address it.
  4. The insurance industry stands ready to collaborate with government to share our risk intelligence to help mitigate these growing challenges.

Background on the project

Understanding the key issues relating to Actions of the Sea will inform risk management decisions, including future mitigating action, that may drive better outcomes for communities exposed to sea level rise.

The ICA’s Climate Change Action Committee (CCAC) agrees that damage from Actions of the Sea is likely to increase in a climate changed future, therefore we have invested in an investigation to better understand the insurance industry’s current position and future options regarding this complex set of hazards.

The understanding of the key issues will inform risk management decisions including future physical mitigating actions that may drive better outcomes for communities exposed to sea level rise.

Objective 

The objective of the project is to understand what are the key issues concerning risk awareness and risk taking due to coastal erosion, inundation, and sea level rise for the insurance industry?

We also need to understand our future data requirements regarding Actions of the Sea and sea level rise, to provide a consistent basis for risk management and decision making.

The project will also yield definitions of the hazards classified as Actions of the Sea and lead to an appreciation of the potential for the insurance industry to offer cover.

Relationship/Partnership

Baird Consulting has been commissioned to conduct the investigation, guided by the CCAC.

Measures of Success

An understanding of the set of hazards termed “Actions of the Sea”. Industry action to be guided by expert provided recommendations.  

Useful links

Help in a disaster
icon Actions of the Sea and Future Risks report
icon www.moneysmart.gov.au

New insurance report calls for national border approach

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New insurance report calls for national border approach

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News release

Wednesday, 8 September 2021

A new report published today by the Insurance Council of Australia (ICA) says Australians impacted by natural disasters this spring and summer are likely to face delays to repairs and rebuilds unless a national approach is agreed to allow essential recovery workers to cross state borders.  

Natural disasters usually result in a surge of claims beyond the capacity of local workforces and the limited access to interstate trades due to Covid-19 restrictions and border closures is causing significant challenges for insurers and their customers.  

The call for a national approach for the movement of essential recovery personnel across state borders is one of six policy changes the ICA is calling for to lessen the impact of future natural disasters, contained in the Insurance Catastrophe Resilience Report: 2020-21.  

The Report provides a data-driven overview across five events declared Insurance Catastrophes by the ICA between October 2020 and June 2021, which included south-east Queensland’s Halloween hailstorm, the NSW storms and flooding in March, and a tropical cyclone in Western Australia.  

The Report also provides an update on community recovery from the Black Summer of 2019-20, which resulted in insurer payouts of almost $5.5 billion across four natural disasters including the devastating bushfires.  

To better protect Australians from the impacts of future natural disasters, the ICA is calling on state and federal governments to urgently act in six policy areas:  

  • Investing more in resilience, particularly at a state level 
  • Improve building quality and standards to provide greater protection from extreme weather events 
  • Better land use planning to ensure no more homes are built in harms’ way 
  • Removing state taxes on insurance to improve the level and extent of cover  
  • A national approach to the movement of essential recovery personnel across state borders  
  • Coordinated disaster clean-up after an event to allow rebuilding and recovery to commence as soon as possible 

The Insurance Catastrophe Resilience Report will be produced annually to provide an update on recent natural disasters. The 2020-21 edition is available at insurancecouncil.com.au 

Comment attributable to Andrew Hall, CEO Insurance Council of Australia:   

The Insurance Catastrophe Resilience Report sets out in clear terms the impact of natural disasters on individuals and communities. Since October 2020 there have been five declared Insurance Catastrophes which have given rise to 134,000 claims totaling almost $2.3 billion.   

But as if fire, flood, storm, cyclone, and hail was not enough, many thousands have had to recover from these events under strict arrangements put in place in response to Covid-19.  

Insurers are seeking a better streamlined process to facilitate border restrictions to enable us to move claims assessors, disaster recovery specialists, builders and tradies in a Covid-safe way between and within states and territories to undertake essential repairs and rebuilds. 

We appreciate the need for restrictions to mitigate health risks, however these must be balanced against the needs of those requiring urgent repairs to their properties that will enable them to pick up their lives and move on. Families can’t wait weeks for State authorities to consider exemptions to be processed to get extra help to impacted communities.  

Useful links

Catastrophe Report
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