Australians to be hit by rising insurance premiums for natural disasters

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 6 years ago

Australians to be hit by rising insurance premiums for natural disasters

By Justine Landis-Hanley

Sydney homeowners are facing increased insurance premiums unless all levels of government take steps to mitigate natural disaster, a Deloitte Access Economics report has found.

Over the past decade, the total economic cost of natural disasters has averaged $18.2 billion a year – 1.2 per cent of the average gross domestic product (GDP).

The Collaroy beach front was hard hit by the 2016 storm.

The Collaroy beach front was hard hit by the 2016 storm.

But the report forecasts the cost of natural disasters in Australia will more than double by 2050, averaging $39 billion per year.

The Building Resilience to Natural Disasters in our States and Territories report was prepared for the Australian Business Roundtable for Disaster Resilience and Safer Communities, of which insurance company IAG is a member.

IAG sells insurance under several brands, including NRMA, CGU, Swann Insurance and WFI.

With the rise in natural disaster costs will come an increase in insurance premiums, a spokesperson for IAG told Fairfax Media.

"From our point of view, we obviously go off the risk of an individual area or property. So, if you do nothing, the costs increase and will affect a range of areas including insurance," the spokesperson said.

"Where we are able to identify a risk [of natural disaster] and reduce it, we are then able to take that into account; so in reducing the risk we are able to reduce the cost of premiums."

NSW will be one of the states worst hit by rising costs.

Advertisement

Over the past decade, natural disasters in NSW have cost an average of $3.2 billion per year; 17 per cent of the national total. Storm has accounted for almost half this figure, while 23 per cent of costs have been due to flood.

No one understands the price of natural disaster more recently than the residents of Narrabeen and Collaroy; towering storm waves eroded about 50 metres of beachfront strip in June last year, sending parts of several seaside properties to their watery graves.

Unless the government takes steps to mitigate the impact of natural disaster, the report estimates NSW will be sinking $10.6 billion a year by 2050.

Based on the report, the business roundtable, of which Optus, Westpac and the Australian Red Cross are also members, recommends local, state and federal governments work with the board to develop resilience strategies and reduce the disaster risk of local communities.

"Both the roundtable and the report stress the importance of working with communities to develop local solutions. When talking about flood and its impact, mitigation could be anything from trying to strengthen the local area or other areas affected by flood, or ... it could be working with the council to help people relocate away from the area," the spokesperson said.

Most Viewed in Business

Loading