How climate change is reshaping insurance for Australian schools

Leading climate risks identified

How climate change is reshaping insurance for Australian schools

Environmental

By Roxanne Libatique

A new report from the Zurich-Mandala Climate Risk Index suggests that extreme heat may negatively impact Australian students’ academic performance, potentially reducing their attainment levels by up to 7%.

The report estimates that this decline could equate to a loss of $73,000 in lifetime earnings per student.

Impact of climate change on core academic skills

The index assessed climate risk across 9,829 primary and secondary schools in Australia, using Intergovernmental Panel on Climate Change (IPCC) climate models combined with Zurich’s proprietary impact analysis.

The findings indicated that rising temperatures could affect core academic skills such as writing, spelling, grammar, and numeracy. Schools in the Northern Territory and Queensland are expected to be among the most affected.

High-risk Australian schools

Under a scenario in which global temperatures rise by 2°C by 2060, the proportion of Australian schools classified as high-risk for climate impacts is projected to increase from the current two-thirds to 84%. Students may experience an estimated 34 extreme heat days annually by that time.

Schools in New South Wales and Queensland have the highest concentration of high-risk institutions, with 92% and 91% of schools in the three highest risk categories. The Australian Capital Territory and Northern Territory also rank among the most affected regions.

The report highlighted that schools serving lower socio-economic communities are disproportionately affected. Approximately 80% of schools in lower socio-educational advantage (SEA) brackets face significant climate risk, compared to around 60% of schools with higher SEA rankings. Many of the 10 most climate-exposed schools are government-run institutions that also face high flood and bushfire risks.

The financial impact extends beyond education. The Australia Institute reported that climate change is driving insurance premiums higher, placing financial pressure on households. More frequent extreme weather events are leading to increased claims activity, prompting insurers to adjust pricing models and risk assessments. The education sector, along with other public and private institutions, may face rising costs for insurance coverage, prompting discussions about alternative risk management strategies.

Leading climate risks

Bushfires and severe hailstorms are the leading climate threats to schools nationwide, although inland schools are generally at greater risk than those in coastal areas.

Alex Morgan, head of general insurance at Zurich Financial Services Australia, said key social infrastructure, which currently support the development of more than 4 million children, have repeatedly suffered the consequences of changing climate, resulting in reduced capacity to effectively teach and learn.

“As an insurer of many Australian schools, Zurich is acutely aware of this growing physical and societal risk,” he said.

He emphasised that understanding these risks highlights the need to build resilience in school infrastructure to mitigate long-term consequences for students and their future employment prospects.

Mandala partner Dr Adam Triggs added that high classroom temperatures can slow children’s cognitive ability and cognitive function, impairing the way students make decisions and process and retain information. He noted that a warming scenario of 2°C could equate to lost earnings equivalent to missing an entire year of employment.

“Perhaps most troubling is how climate risks compound existing inequalities. The same schools already facing socio-educational disadvantage are often those most exposed to climate impacts, creating a double burden for vulnerable communities,” he said.

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