National Climate Risk Assessment Unveils Growing Insurance Challenges
National Climate Risk Assessment Unveils Growing Insurance Challenges
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The Australian government has unveiled its inaugural National Climate Risk Assessment alongside a comprehensive National Adaptation Plan, highlighting the heightened impact of natural disasters on insurance accessibility across the nation.
With an urgent call to action, the government acknowledges the impending climate threats and commits to intensifying efforts towards emission reduction.
In its statement, the government emphasises that no community will escape the cascading and compounding risks posed by climate change. By intensifying efforts to reach net-zero emissions by 2050, Australia aims to mitigate the harshest implications on its communities and economies.
The assessment underscores the stark reality that climate hazards will worsen under any foreseeable scenario. A notable finding is the stark difference in impact between a 2-degree and a 3-degree increase in global temperatures. Health and safety risks are projected to escalate, with flooding, fires, and cyclones becoming increasingly frequent and severe. Rising sea levels are projected to threaten an additional 1.5 million people by 2050, while heatwaves are expected to claim more lives, particularly in northern regions.
With natural disasters becoming more frequent, the cost of insurance is anticipated to rise, leading to a significant increase in the number of underinsured or uninsured properties. While acknowledging the positive effects of the cyclone reinsurance pool in reducing premiums, the report recommends further government intervention to ensure equitable insurance access.
The National Adaptation Plan details how the government plans to tackle the identified risks. Continued support for the cyclone reinsurance pool is assured, along with new collaborations with the Hazards Insurance Partnership to enhance governmental data utilisation. This could involve data collection on climate risks associated with asset locations and development of resilience investments.
Anchoring Australia's disaster resilience efforts is the Disaster Ready Fund, aiming to channel up to $1 billion into mitigation projects over the coming half-decade. The plan also highlights a targeted approach to community displacement caused by natural disasters, advocating for strategic community relocation plans.
The government plans to collaborate with state and local authorities to establish an actionable agenda informed by economic and actuarial analyses. The goal is to pinpoint policy interventions offering the most substantial economic advantage, aligning with ongoing resilience initiatives.
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Knowledgebase
Trauma Insurance: An insurance that pays a lump-sum amount on the diagnosis of one of several critical illnesses or events
