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Press Release

Australian properties at “high risk” will double as severe weather increases

Our CEO Karl Mallon outlines how the physical risks of climate change may affect insurance affordability in the future.
Embargo Date: Embargoed until 12:01am, Wednesday 18 November 2020

Published in:Risk,Risk management,Risk Models,Cat risk,Environment,ROW (18 November 2020)

The number of addresses in Australia at “high risk” from severe weather will almost double by the turn of the century, one of the country’s leading climate risk analysts has told InsuranceERM.

Karl Mallon, chief executive of Climate Valuation, said the 383,330 addresses that the climate risk modelling firm classifies as being at high risk currently, will become 735,654 by 2100.

The actual figure is probably yet higher, because the firm excludes bushfire risk from its analysis, and because the projection assumes no growth in the existing stock of addresses.

Mallon provides extreme weather analysis to insurers, and other clients, through Climate Valuation and XDI, which he co-founded.

Even if every Australian locale remains insurable – as non-life insurance trade body the Insurance Council of Australia (ICA) has often re-iterated – Mallon said “the issue is at what point it becomes a moot difference between affordability and unaffordability?”

Mallon said property owners already struggled to find appropriate cover for perils such as coastal inundation, even though he predicts a significant increase in sea levels, threatening more than just Australia’s coast-bound population, is still 20 or more years away.

Mallon added incumbent property insurers face the danger of fresh entrants “coming in and picking the eyes out of the risks,” simply choosing not to cover more imperilled assets.

The very riskiest few assets on the incumbents’ books drive their flexibility on overall pricing to a significant degree, Mallon said. Liberating oneself from the very sharpest risk of losses, therefore, can make a big difference.

Mallon advocates using building codes to make more peril-resilient properties – one topic on which he concurs with the ICA.
And he advocates schemes for communities at risk to bolster their properties.

Otherwise, he foresees “climate change ghettos”, whose people lack the economic means or resources to adapt properties, “and as insurance prices rise, they won’t have the money to insure, either”.


About Climate Valuation

Climate Valuation is the world’s leading provider of investment-grade physical climate risk analysis on individual properties on a global scale. Our mission is to democratise climate risk information so that governments, banks and the average citizen can make informed decisions about community safety and financial wellbeing. We aim to provide a better understanding of how extreme weather and changing climate will affect homes, neighbourhoods and financial investments. In doing so, we will help prepare our community for resilience and enable all levels of business and government to tackle the issue of climate change.