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Industry urged to heed climate change warnings

International insurers could abandon Australia if loss ratios spiral as a result of climate change, an expert has warned.

Chris Rodd, Australia’s representative on the international insurance law association’s (AIDA) Presidential Council, says the country needs to “wake up” to its level of exposure.

“We’ve already seen crop failures, more bushfires, and fish deaths in the Murray-Darling Basin,” he said.

“Things will get worse.”

Mr Rodd says high uptake of insurance in a highly regulated market attracts international players “but, if loss ratios climb because of climate change, they may abandon the market and that will intensify the problems”.

An active contributor to AIDA’s climate change working party, Mr Rodd is among experts speaking at the Australian Insurance Law Association’s national conference in Hobart starting on October 30.

He says governments should reduce taxes on insurance and consider other models, like New Zealand’s Earthquake Commission (EQC).

“New Zealand knows the insurance market can’t fully indemnify it for earthquakes, so EQC is a collaborative partnership with government and the industry.”

Meanwhile, a report released last week by the Actuaries Institute says global warming could see heatwaves – which kill more Australians than any other natural disaster – triple in frequency and last longer by 2060.

Deaths from heatwaves could rise by 12% among over-65s by 2060-2080 in some regions, the report says.

“More frequent, longer and hotter days will drive a significant increase in mortality, with Australia’s ageing population amplifying the number of people who will die as a result of climate change,” the Institute says.

And Bushfire and Natural Hazards Cooperative Research Centre CEO Richard Thornton told the signs for the upcoming fire season are concerning, following fires in Queensland and NSW which have been declared an insurance catastrophe.

Dr Thornton says the Queensland blazes were within the expected fire season, but were more severe than expected.

“What is unusual is that we led in with extremely dry conditions,” he said.

“The intensity of the fires was surprising.

“We have above normal fire potential in a lot of areas and the drought conditions are the predominant driver.

“We are seeing severe conditions more and more frequently, and the time between Black Saturday type conditions is decreasing.”