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News & Articles

Higher Climate Change Risk Warning

The latest report from the Federal Department of Climate Change has warned that a rise in sea level could see more than 240,000 residential buildings along Australia's coastline under threat of inundation by the end of this century.

The report says that there could be a rise in sea level of as much as 1.1 metres by 2100, threatening between 157,000 and 247,600 buildings with a replacement value of up to $63 billion.

This does not include infrastructure such as ports, airports, power stations, industrial zones and community service facilities like hospitals and police stations.

According to the report, NSW has the most to lose with up to 62,000 residential buildings worth $18 billion, followed by Queensland (57,000 buildings), Victoria (45,000), South Australia (43,000), Western Australia (29,000) and Tasmania (12,000).

"There is an increasing recognition that a sea-level rise of up to a metre or more this century is plausible, and possibly of several metres within the next few centuries," the report says.

The report predicted that extreme weather events were also likely to become more intense with climate change, with larger and more damaging storm surge and the possible extension of cyclones further south along both the east and west coasts of Australia.

Even a mid-range sea-level rise of 0.5 metres could mean a 1-in-100 year event could occur several times a year. The 1-in-100 year event is used in current planning guidelines and by insurers as a benchmark for assessing extreme risk.

As an example, the report cites the intense storms and flooding in the Newcastle and Hunter Region of NSW in 2007 in which more than 200,000 homes lost power, thousands of people were forced to evacuate their properties and insured losses were more than $1.3 billion.

Flood insurance and often been difficult to obtain for Australian policyholders because insurers have argued that there is inadequate flood mapping, competition law has prevented the use of a uniform definition of flood, and that the premium to cover many risks would be unaffordable.

However, a number of insurers have now introduced flood cover, with 46% of policyholders in the eastern States now given automatic cover while more could get the cover if their present insurer does not offer it. A number of insurers now offer flood cover as an optional extra or with an "opt out" clause for people who do not want to pay for it.

The National Insurance Brokers Association (NIBA) would like to see flood insurance more widely available. It will continue to urge governments to put more resources into flood mapping and encourage local councils to prevent development in flood-prone areas.

Most NIBA members will have considered the need to provide some direction to their clients on how to manage the risk of adverse weather as it affects the client's business. Some valuable information has been collated by the Policy, Risk and Disaster Planning Directorate of the Insurance Council, and appears on the Council's website under "Resilience to Extreme Weather for Business".

Individual businesses cannot do anything to prevent extreme weather events but they can be properly prepared for a natural disaster. They should make sure a senior company officer is responsible for risk management and continuity planning.

Businesses need to identify critical functions that must be maintained in the event of a disaster, what assets, supplies and resources are critical to these functions and how long they could survive without them.

They should consider what hazards they are most vulnerable to e.g. fire, cyclone, flood, and identify whether their assets have sufficient protection. There may be supplies and assets beyond their control that are critical to their business.

Finally, make sure the business is properly insured.