The IAG-led Australian Climate Group (ACG) is lobbying the Federal Government to stabilise its national greenhouse gas emissions by 2010 or risk disrupting the economy.

Set up in late 2003 by IAG and the World Wildlife Fund to draw attention to the issue of climate change, the ACG’s latest report warns the extent of climate change is likely to be at the extreme end of the range predicted by scientists.

It says Australia’s emissions are set to rise by 120% on 1990 levels by 2020 unless immediate action is taken.

IAG Senior Adviser Group Corporate Affairs Margaret Keneally told insuranceNEWS.com.au the insurer became involved in the issue because of increasing weather events in Australia and the impacts that has on insurers.

“Weather and climate are core business for IAG,” she said. “Nineteen out of the top 20 most costly insurable events in Australia are weather-related.”

She says a changing and less predictable climate reduces the industry’s capacity to calculate and manage weather-related risk and so IAG decided to help encourage action among the political and business community.

IAG Chief Risk Officer Tony Coleman, who is one of the seven members of the ACG, says insurers are familiar with managing risks to the community that are uncertain and sometimes catastrophic.

“Yet Australia is tolerating a level of climate change risk that would be unthinkable if the nation were held to the same standards that we apply to safeguard the survival of the insurers, banks and superannuation funds that we all depend upon in our daily lives,” he said.

He says APRA requires Australian insurers to be able to withstand combinations of events expected to occur once in every 200 years, but these are “completely dwarfed by the risk levels to our way of life that are now reliably attributable to potentially catastrophic climate change impacts”.

The report says if the insurance industry’s ability to underwrite weather-related risk is reduced or the cost of insurance rises, this could have a serious effect on the economic health of some regions.

It urges the Government to establish an emissions target for 2020 consistent with that of other developed countries.