ICA on how insurers could bolster Australia's extreme weather resilience

Failure to manage risks would see catastrophic losses to local and global economies, study said

ICA on how insurers could bolster Australia's extreme weather resilience

Catastrophe & Flood

By Roxanne Libatique

The Insurance Council of Australia (ICA) has released a new report revealing ways insurers could help Australia become more resilient to extreme weather events.

The report, undertaken by EY for the ICA, outlined emerging insurance products and solutions to help protect Australia’s landscape from natural disasters.

It noted that failure to manage extreme weather events and biodiversity loss would result in catastrophic losses to local and global economies, with more than half of the world’s economic output – US$44 trillion – highly or moderately dependent on nature.

“This report is an important tool for the insurance industry in outlining the risks to Australia’s natural environment and shows that insurers have a critical role to play in protecting nature, and in turn protecting their customers,” said ICA CEO Andrew Hall. “Underwriting and investing in nature can play a key role in building resilience to climate change in landscapes and communities.”

How can insurers help?

According to the report, insurers can help protect Australia’s landscape from extreme weather events by:

  • developing insurance products that protect natural assets, including coral reefs and coastal defences;
  • investing in natural resilience solutions, including wetland restoration and reforestation; and
  • working with governments and stakeholders to develop and implement policies that protect the environment.

“Nature-based mitigation solutions like reforestation and wetlands restorations can be used to reduce the incidence and impact of flooding, landslides, and other disasters,” Hall said. “Where initiatives like these serve to reduce risk, they also serve to better protect communities and ultimately moderate rising pressure on insurance premiums.”

The report also noted how insurers’ innovations can align with the global reporting framework for environmental financial disclosures to ensure businesses and investors know about the risks associated with nature loss and the opportunities arising from nature-protecting products.

Separately, the ICA recently released a report emphasising that historic catastrophes would have greater impact in 2023, exceeding even last year’s record-breaking floods. It called for more investment to make communities more resilient, reform of land-use planning and building codes, and to move people and homes out of danger.

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