Premiums are set to remain “inflated” as changing climate patterns lead to more extreme weather events in Australia, analytics consultancy Decision Inc said today after examining key data from the last few years.
The consultancy analysed rainfall data from the Bureau of Meteorology (BOM) and Australian Prudential Regulation Authority gross written premium (GWP) figures and found a correlation: premium costs have risen in line with annual rainfall increases.
GWP rose to $10.4 billion last year from $8.3 billion in 2019 with rainfall data tracking in line, increasing to 172,000mm from 102,000mm over the same period.
“You can clearly see a broad correlation with how increases in rainfall are affecting the insurance sector over the past three years,” CEO Aiden Heke said.
“The climate has seemingly shifted already, and everything from the relentless flooding seen in Queensland and NSW this year, to the devastating bushfires of 2019 and even pestilence are occurring more regularly and seemingly one after the other.
“As climate impacts rise, so too do the premiums.”
Last week the BOM declared a La Nina is under way, igniting worries the flood-hit east coast may again be inundated in the coming months. The BOM declaration means it will be the third straight year of La Nina in Australia.
Decision Inc says without near term solutions, Australians will need to become accustomed to more regular catastrophic climate events, and therefore become accustomed to the increased costs associated with recovering in the aftermath.
“We need businesses to take a stronger stance, understand their emissions and build climate risk into their modelling, and make change at the board level,” Mr Heke said.
“Major government projects can only do so much; real change can be made at the board level on down.
“In the near term? Sadly, it looks like we’ll be stuck with climate-driven inflated insurance premiums for a while yet.”
