Actuaries are the serious number crunchers who measure risk and that insurers rely on to keep ahead of the curve. They’re saying climate change is now a serious risk on property.
The professional body for risk experts, the Actuaries Institute Australia, claims it now has hard evidence that climate change poses a “serious risk” to the industries that actuaries advise, such as insurers.
Late last year, the institute started keeping a close eye on extreme weather conditions and sea levels through its Australian Actuaries Climate Index. It’s collated two months after the end of each season, following the release of data by the Bureau of Meteorology.
Updated for the first time this week, the index found that the number of extreme hot days was above historical levels in both winter and spring in 2018.
The index tracks extreme weather for 12 different regions of Australia, starting in 1981. The index found more extreme hot days, less extreme cold days and an increase in extreme sea level rises, with the maximum sea level rise 5.9 centimetres.
“Based on the readings, we recognise that climate change is expected to have major environmental, economic and social impacts, and it poses a serious risk to the industries that actuaries advise,” Actuaries Institute chief executive Elayne Grace said.
“We estimate annual natural peril cost to Australia of $11 billion to $12 billion, of which only 40 per cent is insured. This figure includes public assets and the cost of intangible losses, such as mental health and family breakdowns, as a result of natural disasters,” she said.
One group already tuning in to the risks associated with climate change are insurers. Karl Mallon, director of science and systems at climate analytics company Climate Risk told the ABC that within decades around 850,000 homes could be “uninsurable” unless more consideration is given to where and how properties are built.
Dr Mallon thinks people are potentially “sleepwalking” into an avoidable disaster by building, buying and selling inappropriate buildings in unsuitable areas.
“If the industry doesn’t step up, we’ll all pay — both as taxpayers picking up the bill for the recovery… or because of the impact on our communities and our economies,” Dr Mallon said.