Natural catastrophe losses fell 25% to $1.97 billion last financial year, but the long-term trend is rising and vulnerable communities are particularly affected, the Insurance Council of Australia says.

Cyclone Alfred insured losses totalled $1.43 billion, north Queensland floods cost $289.4 million and NSW Mid North Coast and Hunter flood claims reached $247.9 million, the peak body’s catastrophe resilience report shows.

ICA CEO Andrew Hall says recent events show floods in Australia are predictable, repetitive and hit those least equipped to recover economically.

“Approximately 70% of households exposed to the highest flood risk are in areas where the median income is below the national median, and around 35% of these households are in areas where the median income is below the poverty line,” he said.

“This isn’t coincidence, it’s a systemic issue that demands urgent attention.”

The report shows 77% of the 242,000 homes facing severe to extreme flood risk do not have cover, and less than 4% of those homes are in Australia’s wealthiest areas.

Insured losses a year earlier totalled $2.61 billion. Losses for the past five years, including record floods in 2022, are estimated at $22.5 billion, up 67% on the preceding half-decade. 

Munich Re data on comparable nations shows that since 1980, Australia has mostly ranked second behind the US for economic and insured losses per capita from extreme weather. New Zealand was second recently due to its smaller population and the Auckland floods and Cyclone Gabrielle.

Australia’s inflation-adjusted average annual insurance loss per person has climbed each decade. In the past five years it averaged $US109 ($165), up from $US88 ($133) in the previous 10 years.

“While Australia has always faced extreme weather, the accelerating losses per person and their compounding impact on communities is costly and ongoing,” Mr Hall said.

“Insurers have been costing the implications of extreme weather for a long time now, but with escalating costs and pressure to build more homes faster, we need to speed up our investment in the interventions required to mitigate the impact of these events.”     

ICA is calling for the federal, Queensland, NSW and Victorian governments to back a 10-year $30.15 billion flood defence fund, and says the federal Disaster Ready Fund, budgeted through fiscal 2029, should become an inflation-indexed rolling program.

The resilience report is available here.