Natural disasters

years: floods, cyclones, hailstorms, bushfires and earthquakes. The consequences are

among the worst in the world, and the risks associated with them are changing fast. Major natural catastrophes are a heavy burden even to successful economies like Australia’s. Data from 2017 indicates that 97% of disaster funding is spent on post-disaster relief and recovery, with only 3% is invested in mitigating a disaster before it happens.

development, will significantly alter the insurance industry's risk maps of

Australia and New Zealand over the coming decades.
While the effects of climate change are still emerging, the question arises as to what we – both insurers and society – need to do to be ready for the future. Below is a brief summary of the current and projected situation for the region:
Changes in severe thunderstorms
More intense tropical cyclones
Circulation changes and less rainfall over southern Australia
Decrease in total rainfall
Changes in flood hazard
More extreme drought events in Australia
Growing bushfire hazards in Australia

above
Losses from severe convective storms, in particular from hail, represent

the most frequent and (on an annual aggregate basis) the highest losses for the insurance industry in the entire Australian natcat business. Seven of the ten most expensive (inflation-adjusted) insured convective storm losses in Australia have occurred within the last 10 years.
Over the last 39 years, the accumulated losses (all in Australian CPI-adjusted values for 2018) from severe convective storms total around A$ 20.5bn for insured losses and A$ 33.6bn for direct economic losses. Compared to other perils in Australia, only losses from flood events reach similar dimensions. In terms of frequency, losses from severe convective storms make up about 50% of all loss-producing natural hazard events that occur in Australia.

most aware of. Major floods frequently isolate towns, create major

disruptions to road and rail links, and can cause death. Widespread damage to houses and business premises as well as losses in agriculture are common. Practically every year there are flood losses, sometimes with devastating consequences.
Despite regular loss events, the consequences of flooding are still often underestimated – both in Australia and around the world.

in Australia rarely reach the east coast of southern Queensland

- the last time was in the 1970s. However, current climate change predictions and increasing concentrations of values are making risk researchers sit up and take notice, because should a storm event occur, the consequences could be devastating.

bushfire has been the second biggest cause of insured property

loss from natural hazards after severe thunderstorms. Victoria is the most exposed state, but the risk is also high in other regions like the suburbs of Sydney in New South Wales.
Bushfires are an intrinsic part of the natural ecology of the Australian landscape. The eucalyptus – the archetypal Australian plant – is particularly fire prone on account of its high oil content. In the southern part of the country, the dry months in summer are the most dangerous time, especially after rain has increased vegetation growth in the preceding winter. Unfortunately, the region most prone to major bushfires, southeast Australia, also has the highest concentration of people and insured values.

in size. At first glance, this appears to be a

much more comfortable situation than in New Zealand, Japan or the United States. However, on closer examination the picture looks different: earthquakes in Australia could cause insured losses in the same order of magnitude as in the highest-exposed regions worldwide.
Australia is not known to be an earthquake hotspot – but neither was Christchurch in New Zealand. As it turned out, in Christchurch in 2010/2011 an unexpected series of severe earthquakes with a magnitude of up to 7.1 surprised even the experts and destroyed large parts of the city – it was one of the most expensive insured natural catastrophes in history.