The Insurance Council of Australia (ICA) has called for “strong leadership” from Canberra to help the industry tackle climate change impacts.

Insurers have already started reviewing their business models and practices such as including climate considerations into their underwriting and pricing practices and setting emissions reduction targets, ICA says.

They have also tailored their approach to investing to support the transition to a net zero economy as well as design innovative product like parametric solutions that provide rapid payouts based on pre-defined climate triggers.

To facilitate the industry’s long-term planning, the ICA says the Federal Government can do more by taking the lead on key areas.

“Governments can better support the insurance industry to prepare for or respond to the impacts of climate change by providing strong leadership on climate change,” the ICA says in a submission to a Climate Change Authority (CCA) issues paper. The CCA advises the Government on climate change policy.

ICA says strong leadership “through the setting of strong national emissions reduction targets that are underpinned by policies to support communities, businesses and industry to mitigate and adapt to the risk of climate change” will help insurers with their climate response plan.

“Providing clear and consistent policy signals on climate change and the transition to a low-carbon economy creates a stable and predictable investment environment which enables businesses and investors to make long-term plans and allocate capital towards green and climate-friendly initiatives,” ICA says.

The ICA says the Federal Government should set a science-based emissions reduction target for 2035 that is aligned with the Paris Agreement and consistent with timeframes set by the United Nations Intergovernmental Panel on Climate Change.

It also urged the Government to establish a “consistent and accessible” national database for climate projections and modelling for the key extreme weather perils for use by agencies involved in determining the spatial planning arrangements for future settlements.

Click here for more from the submission.