Wednesday , June 16 2021

Insurance premiums rise as extreme weather conditions become more common



Updated

8 November 2018 11:16:28

Residential real estate owners and companies are likely to face higher premiums after the new actuarial index warned of rising financial risks in extreme weather conditions.

Key points:

  • The climate index is updated every season
  • Developed with regulators and natural hazards researchers using national data
  • Losses due to coastal erosion alone are estimated at $ 88 billion without land value

The Australian Actuaries Climate Index reports risk factors such as elevated sea level levels, droughts, bushfires, cyclones, floods and extreme temperatures.

The indicator, developed by leading actuary and CEO of Finity Consulting, Tim Andrew, warns of the densities of extreme conditions in the autumn higher than the historic extremes in the fall of 1981-2010.

"It's fair to say that this is a fairly new area for everyone and you can imagine that insurers are particularly concerned that they have to pay adequate rewards for the risks they are using," Andrew told ABC's AM program.

"The index clearly shows that the occurrence of extreme phenomena is increasing, and it could be expected that many people in the ashes and flood-prone areas will face some premium increases.

"One of the challenges for us is to make sure that we are building real estate in the right places so that we can minimize the impact in the future."

The Australian Supervisory Authority (APRA), which oversees banks and insurance companies, warned last year that risks to climate change were predictable, relevant and workable.

APRA's Manager Geoff Summerhayes noted that the index was an important step towards a cross-industry standard for revealing the risks of extreme weather events and the impact on companies, consumers, developers and governments.

"We believe this initiative is a positive step towards assisting regulated entities to understand and control the potential impact of climate risks on businesses," Summerhayes said.

The index – updated every quarter and supported by the Meteorology Bureau and CSIRO – is based on similar directories currently used in Canada and the United States.

Actuaries Institute's CEO Elayne Grace stated that the index was a "first step", as actuaries develop clearer climate risk measures.

"We hope we can build this index by attaching risk data such as property damage and health statistics to understand the relationship between extremities and risks so that we can develop more accurate risk relationships," Grace said.

The index adds to concerns about future climate changes when the Climate Office warned in 2016 that the possible damage to coastal erosion was estimated at $ 88 billion without land value.

The index was developed by consulting scientists dealing with regulatory and natural hazards, collected nationally and grouped for twelve climatically similar reasons.

Tim Andrews wants to stay away from politics that surrounds cynicism on climate change, but hopes that the cynics of climate change will not remain shadowed by shifting to greater consciousness.

"This is inevitably a risk for these issues. Political is often disappointed and I hope this message will not go away."

topics:

business-economics-and-finance,

insurance,

climate change,

Australia

First sent

08.11.2018 10:42:08


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