Climate change and extreme weather events are causing an insurance crisis in Australia, according to a new Climate Council report. Modelling shows that by 2030, one in 25 homes will be effectively uninsurable due to more intense and frequent weather disasters, such as floodscyclones, and bushfires. This number rises to one in seven in Australia’s most at-risk areas. Some areas may become completely uninhabitable altogether.

The new report, Uninsurable Nation: Australia’s Most Climate-Vulnerable Places, shows how worsening extreme weather will cause an insurance crisis for properties. Homes, workplaces and commercial buildings will increasingly need repairs and replacements. Insurance premiums will soar to cover the increased cost of claims and reinsurance. This will make insurance increasingly unaffordable – or even unavailable – in large parts of Australia.

“It is clear that Australia is fast becoming an uninsurable nation. Skyrocketing costs or flat out insurance ineligibility are becoming more and more widespread under climate change”, said Nicki Hutley, Climate Councillor, leading economist and former Partner at Deloitte Access Economics. “As an economist, I find these new numbers shocking and deeply concerning.”

An insurance crisis will hurt the most vulnerable

Among developed nations, Australia is one of the most vulnerable to the impacts of climate change. And, while all Australians will be affected, the most financially vulnerable will suffer the most from the looming insurance crisis. Furthermore, some regions are at much greater risk than others from extreme weather caused by climate change.

To help Australians better understand the risk in their area, the Climate Council created a Climate Risk Map from hundreds of millions of data points analysed by Climate Valuation. The map identified the most at-risk electorates from worsening extreme weather.

10 most ‘high risk’ areas for properties by 2030

  1. Nicholls, Victoria: 27 per cent, or 25,801 properties
  2. Richmond, New South Wales: 20 per cent, or 22,274 properties
  3. Maranoa, Queensland: 15 per cent, or 9,551 properties
  4. Moncrieff, Queensland: 14 per cent, or 18,032 properties
  5. Wright, Queensland: 14 per cent, 12,140 properties
  6. Brisbane, Queensland: 13 per cent, or 19,355 properties
  7. Griffith, Queensland: 13 per cent, or 14,812 properties
  8. Indi, Victoria: per cent, 11 per cent, or 11,215 properties
  9. Page, New South Wales: 11 per cent, or 11,691 properties
  10. Hindmarsh, South Australia: 11 per cent, or 10,775 properties

Australians can also enter their postcode or suburb to check their area’s climate risk. Additionally, there is the option to email this to their MP to demand strong action on climate ahead of the election. “I urge all Australians to use this tool to understand the risk they and their communities face as we progress through this critical make or break climate decade”, said Hutley.

The report also found that riverine floods are the most costly disaster in Australia. Of the properties classified as uninsurable by 2030, 80 per cent of that risk is due to riverine flooding. This corresponds with the report that last year, Australia’s floods were named in the top ten most expensive disasters of 2021 globally. The flood of February and March 2022 has also been named Australia’s most expensive flood ever, according to the Insurance Council of Australia (ICA).

It is not too late to halt the worst effects of climate change

The decisions and actions on climate over the next term of government are crucial. “It’s striking how the number of affected properties grows under higher emissions scenarios”, said Dr Karl Mallon, CEO of Climate Valuation. “Reducing emissions would potentially save thousands of homes from worsening damage.”

Unfortunately, the current Federal Government has wasted years avoiding tackling climate change. This means action on climate is more urgent than ever. “Climate change is playing out in real time here and many Australians now find it impossible to insure their homes and businesses”, said Amanda McKenzie, Climate Council CEO. “The decisions of the next Federal Government will influence the future impacts of climate change for generations to come. Pollution from coal, oil and gas must begin to plummet and we must scale up our renewable power so it meets the needs of all sectors of our economy.”

Policies to reduce emissions would not only reduce climate risk and hazards. They would also result in cheaper fuel and power bills, create more jobs and strengthen the economy, outlines the report. Citizens would also enjoy healthier air. With Australia’s abundance of clean energy resources, renewables must be an absolute priority for the next Federal Government. Furthermore, the next government must prioritise investment in national adaptation and disaster risk reduction funding. This will help Australians better prepare for the extreme weather events and other impacts of climate change that the future will bring.