Australia ‘sleepwalking’ into climate disaster without major insurance change

Hundreds of thousands of Australian homes deemed too ‘climate vulnerable’ will be uninsurable by 2030.

NSW Premier Dominic Perrottet and Orange MP Philip Donato walk through flood damaged businesses in Eugowra. Picture: Getty Images

Without major changes to the way home insurance policies work, Australia will be “sleepwalking into a disaster of our own making”, an Australian academic has warned.

The nation needs to consider a Medicare-style insurance policy or risk abandoning people living in “climate-vulnerable” homes amid astronomical insurance premiums and the threat of blanket insurance bans on disaster-prone postcodes, according to UNSW political philosophy professor Jeremy Moss.

As flood-ravaged NSW and southeast Queensland communities look to rebuild after billions of dollars in flood damage, insurance companies have reportedly refused to renew flood coverage for towns such as Forbes, while others face premiums of as much as $40,000 per year.

“This doesn’t just affect low-income earners, most people can’t afford to pay tens of thousands of dollars a year … it shows that the current insurance model doesn’t work anymore,” Professor Moss told The Australian.

With $5.56bn in insured losses from more than 236,000 claims, the February-March flooding events combined were Australia’s most costly extreme weather event, according to the latest Climate Council report.

After facing its worst flooding event in 70 years, Forbes residents were hit by the shocking news that their home insurers were refusing to renew their flood coverage. Picture: Joshua Gavin

A failure by government to mitigate the impact to properties would be the next devastating climate disaster, Professor Moss said. “People will be living in a constant state of fear of the risk that they could lose everything and get nothing in return.”

Climate Risk says more than 445,000 homes across Australia will be uninsurable against fire by 2052. And by 2030 80 per cent of all uninsurable homes will be because of riverine flooding.

Professor Moss said federal and state governments needed to view having a home as a “right” similar to how Australian citizens are entitled to affordable and accessible Medicare.

“In Australia, we see health as one of the necessities of life and it’s provided to people who desperately need it and for mundane check-ups, and we all pay tax to ensure that right,” he said.

As reports emerge of insurance companies abandoning residents in flood ravaged towns like Forbes, UNSW political philosophy professor Jeremy Moss, says the government needs to look at introducing a Medicare-style insurance solution. Picture: Supplied

“So my suggestion is we do the same for housing – to some degree – as well.”

But the Insurance Council of Australia rejected the idea, saying a government scheme to subsidise home insurance would have only long-term negative impacts. “The fundamental objective of any scheme should be to reduce or remove the risk to people, property and infrastructure,” ICA told The Australian.

“(But a subsidy) may have the opposite effect and lead to mitigation measures being delayed or not being implemented, which would increase the risk to people and property in the vulnerable locations.”

ICA CEO Andrew Hall said the data clearly showed the need to fast-track disaster prevention methods such as investing in community-level mitigation, home retrofits, home buybacks in extreme cases, and better early warning systems.