The National Climate Risk Assessment raises important issues around the protection gap and risks such as coastal inundation, Finity principal Rade Musulin says.

There will be challenges and opportunities for insurers, according to Mr Musulin, who was involved in reviewing the assessment’s literature before publication earlier this week and is chair of the International Actuarial Association’s climate and sustainability committee.

While the report will hold few surprises for the insurance industry, it “does a great job of pulling the information together” for public discussion and debate, he told insuranceNEWS.com.au.

The assessment warns there could be problems with insurance availability and affordability amid more extreme climate hazards.

“I think one of the key things this does point out is that the location of significant perils – that risk may shift in the future.”

Mr Musulin says this is particularly important in terms of property resilience.  

“The climate may shift faster than the building stock can react, and in different locations the built stock may not be as fit for purpose as we would like.”

As risk increases, premiums will rise, “particularly if we don’t strengthen the housing stock with a sense of urgency”.

Mr Musulin notes the pause in changes to the National Construction Code – a move designed to speed home building and make housing more affordable – but says insurance premiums and energy costs should fall as homes become more resilient and energy efficient.

The report also warns of high uninsured costs from coastal inundation and rising sea levels, which could threaten the cohesion of some coastal communities – “something that I think has not gotten enough attention to date”.  

The risk assessment was released with the National Adaptation Plan, which provides a guideline for the Australian government to respond.

Mr Musulin says an immediate priority should be understanding how to prepare and strengthen communities, not just in terms of buildings but protecting people against heat stroke and future-proofing jobs.  

He says better data and risk tools will enable insurers to offer more products at an individual level and make insurance more available and affordable in some areas, although there will be pockets that face pressure.

“Insurers have been working on improving their modelling and their risk assessment tools for some time and this report will provide even more information for them to get a better view of risk.”