New Report Highlights Growing Economic Toll of Extreme Weather in Australia
A new report from the Insurance Council of Australia (ICA) has shed light on the escalating financial impact of extreme weather events on the Australian economy.
A new report from the Insurance Council of Australia (ICA) has shed light on the escalating financial impact of extreme weather events on the Australian economy.
According to the Insurance Catastrophe Resilience Report 2023-24, losses from insurance catastrophes have skyrocketed, consuming a growing portion of the nation's economic resources.
Insured losses from extreme weather events have tripled over the past three decades, now equating to 0.7% of Australia's GDP over the last five years, compared to just 0.2% between 1995 and 2000. The surge is driven by increasing severity and frequency of events such as floods, storms, and cyclones, with insurers now paying out an average of $4.5 billion per year in weather-related claims, more than double the $2.1 billion annual average seen over the last 30 years.
“The latest data highlights the accelerating costs of extreme weather events in Australia,” said Andrew Hall, CEO of the ICA. “Flood, in particular, remains the country's most costly natural peril, with around 1.2 million properties at risk.”
In 2023-24 alone, insurance claims from declared extreme weather events totalled $2.19 billion—matching the previous year’s figure. However, the number of claims surged to almost 157,000, 66,000 more than the prior year. While the average claim was lower, Hall emphasised the growing scale of devastation across communities.
“The rising number of claims shows the widespread impact these events are having on households and businesses,” Hall said.
Among the costliest events was the Christmas storm, which hit the Gold Coast, New South Wales, and Victoria, generating $1.33 billion in claims. The hardest-hit individuals, however, were residents of Far North Queensland affected by ex-Tropical Cyclone Jasper, where the average claim reached $36,000—nearly triple that of other storms.
The report also highlights the growing gap between insurance premiums and profitability. Though total premiums collected by insurers have risen from $50 billion in 2012 to $86 billion in 2023, insurer profits have remained flat.
Addressing these challenges, the ICA’s report outlines several policy solutions aimed at mitigating risks and reducing premiums. Key recommendations include stricter land-use planning to prevent construction in high-risk areas, more robust building codes, increased investment in public infrastructure like flood levees, and expanded home buyback programs for areas where no mitigation is possible.
“De-risking is the only sustainable way to reduce pressure on premiums and close the protection gap,” Hall said.
Andrew Hall will be taking the stage as part of our lineup of industry leaders speaking at the upcoming flagship event for the insurance broking profession, the 2024 NIBA Convention.
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