If you didn’t think climate change was bad enough it’s time to think again, as insurers are warning that it’s about to hit where it hurts the hardest — your wallet.
Speaking to The Guardian Australia, Federal Assistant Treasurer Stephen Jones said insurers warned the government the country was running out of time to mitigate factors.
“They said, ‘you’ve got five years basically’,” he said.
“They like what we’re saying but they want to see that backed up by action. Insurance affordability is a key economic issue. It’s on the boil now but I think it’ll be a significant issue over the next couple of years.”
Yep, insurance is at risk of becoming unaffordable, if you can get any at all.
A spokesperson for the Insurance Council Of Australia told PEDESTRIAN that the protection gap (the difference between the cost of recovering from extreme weather events in Australia and the insurance in place to cover those events) is too large and it’s becoming ever more difficult for insurers to manage.
“It’s estimated that in developed countries like Australia, insurance covers around 50 per cent of the cost of extreme weather events, with 50 per cent left, essentially, for governments and the community to cover,” they said.
“In 2022 alone, there were more than 300,000 disaster-related claims lodged from four declared insurance events across the country, costing $7.17 billion in insured losses.”
For some Australians, it’s already too late. Just last month it was reported that homes in flood-ravaged regions of NSW were either uninsurable or unaffordable.
And of course, a lack of insurance will have far-reaching impacts, and could worsen the already dire housing crisis.
“The reality is, if you can’t insure a house, you will not be able to get a mortgage,” Australian Institute executive director Richard Denniss told news.com.au.
“There will be communities in Australia where banks will not lend.”