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As we see the predicted unravelling of insurance in high climate risk communities, will we stand by and watch?

The unavailability of affordable insurance in climate affected areas is forcing businesses to shut down or face financial devastation.

By Dr. Karl Mallon, Climate Risk and ClimateValuation

A recent article in the Sydney Morning Herald“Why bush holidays could become a thing of the past” raises the real and serious question of whether climate change and extreme weather — from drought and bushfires to sea level rise and flooding — could result in thousands of holiday businesses becoming uninsurable and therefore unviable. The article suggests that popular tourist destinations around the country are “in a battle for their survival as insurers flee the industry en masse.”

To be clear, the insurers cannot be blamed for the wrong type of housing in the wrong place.  But they, and the whole property sector, do have a case to answer for all of the people who have bought houses in high climate risk zones while everyone who took their money and said nothing.

For the last ten years, Climate Risk, and our newer mortgage-focused business, Climate Valuation, have been warning that extreme weather damage being escalated by climate change poses a significant risk, not only to residential homeowners but to businesses and communities as a whole. The failure of the public and private sector to be up front about the effects of climate impacts on insurance has put many communities in an adverse position which is now starting to unravel.  

Last year, Climate Risk developed and released the  “Red Zones of Risk” report in partnership with the ABC exposing Australia’s most at-risk areas due to climate change impacts. The data provided in the ABC story, along with the free property tool on our own ClimateValuation site allows the general public to check the risks to their homes and suburbs from extreme weather and climate change impacts. It’s the kind of information Australians should not only be using to assess their risk but that local governments and communities should be sharing in order to plan for likely impacts and develop resilience strategies.

Insurance is just the start. Climate change doesn’t just impact property, it also impacts critical infrastructure such as telecommunications, roads, transportation, hospitals and businesses such as supermarkets, banks and fuel stations. Communities generally can’t function without these essential services.

We at Climate Risk have been vocal about the likely impacts from climate change on our communities and the recent Sydney Morning Herald article indicates that the events we predicted are now unfolding. How much more do businesses, homeowners and communities around the country need to suffer before we demand collective action to protect the vulnerable and prevent the worst climate change impacts? It is imperative that insurers, mortgage lenders and governments at all levels come together to avert the economic abyss faced by a growing number of communities.

Have we got your attention yet?

Dr Karl Mallon is Head of Science and Technology at Climate Valuation. He has worked on climate change impacts for over 20 years and is a prominent advocate for the rights of vulnerable groups to have access to relevant information about climate change risks.

Climate Valuation is here to help!

Climate Valuation is a passionate advocate for the rights of homeowners and homebuyers to protect themselves and their investments against the threat of climate change. We are the first company in the world to calculate the physical and financial costs of climate change to residential property. By giving homeowners and homebuyers access to this information, we aim to empower individuals to make more informed decisions and build a more climate-resilient community.

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