New Senate Inquiry to probe the impact of climate change on premiums

The Australian Senate has agreed to establish a new inquiry into the impact of climate change on insurance premiums and coverage.

The Australian Senate has agreed to establish a new inquiry into the impact of climate change on insurance premiums and coverage. Last week, NSW Senator and the Leader of the Australian Greens Mehreen Faruqi moved a motion in the upper house to establish the Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability, which was agreed upon.   

This new Senate Inquiry comes on the back of the currently ongoing House Economics Committee’s inquiry into insurers’ responses to the 2022 flood claims. 

As per the Terms of Reference, the inquiry will investigate and report on several issues, including but not limited to: 

• the unaffordability of insurance in some regions due to climate-driven disasters; 

• the unavailability of insurance for some people due to climate-driven disasters; 

• the underlying causes and impacts of increases in insurance premiums; 

• the extent to which increased climate risk is being priced into insurance products not exposed to climate-driven risks; 

• the distributional impact of increases in insurance premiums across communities, demographics and regions; 

• the role of governments to implement climate adaptation and resilience measures to reduce risks and the cost of insurance; 

• how the pricing of risk from climate-driven disasters can be better redistributed across the economy; and 

• any other related matters. 

The inquiry is also seeking submissions from the industry around the degree to which the growing impact and risk of climate change is being considered when pricing insurance products.  

The inquiry will hand down its findings through a report that’s due by 19 November 2024.