Unequal Levees and Rising Insurance: Senate Inquiry Unveils the Risks

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.

Share this news item:

No news available under the category: insurance.

Life Insurance Articles

Illness and Your Finances: Strategies for Continuous Income Flow

When illness strikes, the impact on your finances can be as significant as on your health. Maintaining continuous income flow during such times is crucial for financial stability. - read more

How to Determine the Right Income Protection Coverage for Your Needs

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: A Must-Have for Australian Adults

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: Balancing Cost with Adequate Coverage

Income protection insurance is a critical safety net for anyone who relies on a steady paycheck to meet their financial obligations and maintain their lifestyle. It offers a replacement income if you are unable to work due to illness or injury, ensuring that your financial responsibilities can be met even when you're not at your earning best. In today's fast-paced world, income protection has become an essential consideration for the modern working individual. - read more

Understanding Income Protection Insurance: A Comprehensive Guide for Australians

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

Start Here !

Apply now for your free Insurance assessment and price comparisons!

This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Clark Family Pty Ltd is an Authorised Representative (AR 1298860) of Unique Group Broker Services Pty Ltd (AFSL 509434) for financial product referrals and an Authorised Credit Representative (ACR 401491) of Saccasan Pty Ltd (ACL 386297). Check our licensing details on the ASIC registers: Clark Family Pty Ltd ACR, Clark Family Pty Ltd AR, Saccasan Pty Ltd, Unique Group Broker Services.

IMPORTANT: We do not provide financial product advice or credit assistance. We act solely as an introducer and refer enquiries to licensed third-party intermediaries, insurers, and lenders - with whom you can then deal directly. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for validating the legitimacy of our referral partners, you should always verify the credentials of your financial adviser before proceeding with recommendations that they may present. Visit the ASIC website for further information.