Worsening droughts, bushfires and floods such as the one that Queensland and NSW are now experiencing will become even more severe and frequent as climate change takes hold in Australia, with potentially huge ramifications for the insurance industry.

A report released overnight by the Intergovernmental Panel on Climate Change (IPCC) says ongoing climate trends have “exacerbated” many extreme events in the country, citing very high confidence in its observations.

“The Australian trends include further warming and sea-level rise, with more hot days and heatwaves, less snow, more rainfall in the north, less April-October rainfall in the south-west and south-east, more extreme fire weather days in the south and east,” the IPCC Working Group II report’s chapter on Australasia says.

“The region faces an extremely challenging future that will be highly disruptive for many human and natural systems.”

According to the report, the extent to which the limits to adaptation are reached depends on whether global warming peaks this century at 1.5, 2 or 3-plus degrees above pre-industrial levels.

“Whatever the outcome, adaptation and mitigation are essential and urgent,” the report said.

The report says, also with very high confidence, that some parts of the country are already experiencing or at risk of “irreversible change” as a result of climate trends and extreme events converging to cause major impacts for many natural systems.

It says the current 1-in-100 year flood in Australia could occur several times a year because of climate change.

It describes the Great Barrier Reef as being in “crisis” because of warmer oceans and heat exposure, a condition that carries “implications” for coastal risk, according to Aon Senior Catastrophe Analyst Tom Mortlock.

He says the reef is often valued in terms of its economic value to Australia, but less so in terms of its value in providing coastal protection to the coastline behind it.

“With sea level rise and an increasing frequency of marine heatwaves leading to coral mortality, the coastal protection afforded by the reef is being eroded,” he told insuranceNEWS.com.au. “At the same time, warmer oceans provide more energy for tropical cyclones.

“The loss or large scale degradation of the reef would have significant implications for coastal risk along the north Queensland coast.”

In relation to finance, the IPCC report says with high confidence the finance sector including insurance has significant exposure to climate variability and extreme events, and that it will possibly get worse in the coming years.

Risks for the finance sector are projected to increase, the report says.

“The core thing is that the climate risks which Australia is exposed to are likely to increase significantly… particularly looking at extreme events of different types that often are insurable,” IPCC Vice Chair Mark Howden said.

Professor Howden, who is also Director of the Climate Change Institute at the Australian National University, says there’s been “a lot more change” since the IPPC released its Fifth Assessment report in 2014. Yesterday’s Working Group II report is the second instalment of the IPCC’s Sixth Assessment Report, which will be completed this year and it comes eight years after the last report.

“We've always had the risk of bad storms, east coast lows… but climate change is just making that risk worse,” Professor Howden told insuranceNEWS.com.au.

The floods now inundating Queensland and NSW is an example of how climate change is “embedded” in extreme weather events, he said.

Click here for the IPPC report’s chapter on Australasia.