Unequal Levees and Rising Insurance: Senate Inquiry Unveils the Risks
Unequal Levees and Rising Insurance: Senate Inquiry Unveils the Risks
2
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Levees, essential barriers against flooding, enhance disaster preparedness but are constrained in their protective capacity, as highlighted in a recent Senate inquiry regarding climate risk and its implications on insurance rates.
"Levees come in varying standards," emphasized Rhys Whitley, Suncorp's scientific specialist, during Friday's session. "Each levee is designed with a specific flood height in mind. Installing levees generally provides significant community protection and can lead to decreased insurance premiums, but not all levees offer the same level of security."
Dr. Whitley was addressing a query from the Senate select committee, which wanted to understand why some communities haven't seen insurance premium reductions despite levee construction. "Levees can be engineered for different return periods, such as a one-in-20-year or a one-in-100-year flood event," he explained. "If a levee is built to lower standards, it can be overtopped by sufficiently extreme weather events."
"Additionally," Whitley noted, "levee design standards often rely on historical data, which can be sparse and non-continuous across Australia. We cannot solely depend on human observations since weather systems are capable of producing events beyond our historical experience, such as the 2022 east coast floods."
The Senate committee's hearings, which took place in Ballina, NSW, on Thursday and Brisbane on Friday, saw testimony from community representatives and councils who voiced their frustrations about insurers' pricing and response strategies post-disaster. Suncorp and RACQ Insurance were the only insurers to appear before the committee.
When questioned about climate change's effect on premiums, Dr. Whitley commented, “Addressing climate change might cause a minor impact, perhaps smaller than the annual inflation rate, typically under one percent year-on-year. However, it is crucial not to overlook natural climate variability's role."
He further explained that climate change is expected to increase the frequency and severity of extreme weather occurrences. "Predicting the rate of this change is challenging due to natural climate cycles and fluctuations," he said. "It's difficult to attribute specific weather events solely to climate change. Nevertheless, such events offer clear indications of shifting risk profiles, which we must factor in when determining insurance premiums."
This perspective underscores the importance of differentiating between the inherent risks of natural variability and the additional layer of complexity introduced by a changing climate, presenting ongoing challenges for both insurers and communities in adapting and mitigating risks effectively.
Published:Tuesday, 13th Aug 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
In a strategic move to make life insurance more relevant to younger Australians, TAL has expanded its Health Sense Plus program to encompass income protection policies. This initiative allows advisers to offer clients enhanced value through a straightforward preventative health engagement. - read more
Australian Food Super has announced a transition to age-based pricing for its insurance offerings, a move that will see premium costs vary according to members' age brackets. Effective November 1, 2025, this change aims to align insurance costs more closely with the risk profiles associated with different age groups. - read more
Recent research from Rainmaker Information indicates a significant decrease in life and income protection insurance premiums across Australia. Direct life premiums have fallen by 7% since 2024, while direct income protection premiums have seen reductions of 12% and 13% for policies with 30-day and 90-day waiting periods, respectively. - read more
Australia's life insurance sector is witnessing a significant transformation, with mental health conditions emerging as the predominant cause of Total and Permanent Disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health-related TPD claims now constitute nearly one-third of all such claims, highlighting a profound shift in the factors leading Australians to exit the workforce permanently. - read more
The Australian life insurance industry has reported a remarkable financial turnaround in the fiscal year 2025, with earnings more than doubling to $360 million, according to the latest figures from the Australian Prudential Regulation Authority (APRA). This 210% increase in profit after income tax marks a significant recovery from previous years' losses and underscores the sector's resilience and adaptability. - read more
Income protection insurance is a type of coverage designed to replace a portion of your income if you're unable to work due to illness or injury. - read more
Income protection insurance is an essential component of financial security for Australians, designed to provide a safety net by replacing a portion of your income if you're unable to work due to illness or injury. Despite its critical role in safeguarding livelihoods, it's often overlooked in personal financial planning. - read more
Insurance is a crucial component of financial planning. While many Australians understand the importance of life insurance, there's another vital type of coverage that often gets overlooked: income protection insurance. - read more
Income protection insurance is a type of insurance policy designed to provide you with a continuous flow of income in case you are unable to work due to illness or injury. It's a safety net that helps ensure you can maintain your standard of living, even when unforeseen health issues arise. - read more
Income protection insurance is a safety net that many Australians rely on to secure their financial future in the event of illness or injury preventing them from working. It's a type of policy that provides a replacement income if you are unable to earn your regular income due to a health-related absence from the workplace. - read more
Start Here !
Apply now for your free Insurance assessment and price comparisons!
