The Insurance Council of Australia (ICA) has lent its support to the Senate Select Committee’s report concerning the impact of climate risk on insurance premiums and availability. This comes as Australia grapples with a growing insurance protection gap in high-risk areas, which is being exacerbated by the increasing frequency and severity of extreme weather events, along with continued development in these risky zones.
The ICA has welcomed the committee’s array of recommendations aimed at alleviating the situation. These suggestions include pumping more funds into the Disaster Ready Fund, halting new developments in high-risk regions, toughening up building codes, and doing away with taxes on insurance premiums. It’s worth noting that the financial toll of extreme weather is indeed on the rise, with insured losses amounting to a staggering $2.19 billion between 2023 and 2024 due to just four major events.
Australia’s general insurers have already been taking steps to address climate risk. For instance, through the industry’s Climate Change Roadmap, which details strategies for substantially cutting emissions across various aspects like operations, investments, supply chains, and underwriting. Looking ahead, the ICA plans to review the senate report’s recommendations thoroughly and will engage with its members over the coming months to determine how best to implement measures that can better protect Australians in the face of worsening extreme weather conditions.
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