More than 4% of Australian properties face high risk from natural hazards that have been made more dangerous by climate change, leaving insurance “often unaffordable or unavailable”, according to new modelling.

The analysis by Climate Valuation – examining more than 15 million properties across 15,000 suburbs – found another 10% are at moderate risk from floods, bushfires, tropical cyclones, coastal inundation and extreme wind.  

Those properties face “abnormally high” insurance costs, the home valuation group says, in a report commissioned by the Climate Council.

Climate Valuation founder Karl Mallon says the research shows climate change “is not a far-off future event: it threatens entire communities today. It is imperative that decision-makers at all levels look seriously at the stark statistics presented here.”

The modelling categorises 86 suburbs as “critical climate risk zones”, where 80%-100% of properties are high-risk and insurance may soon be unaffordable or be withdrawn.  

In response, the Insurance Council of Australia said today that “insurers have been sounding the alarm for years” and are “on the front line of climate change and have long warned about the rising cost of extreme weather and the implications on insurance premiums. This is shown in long-term advocacy, with our consistent calls for greater investment in resilience and mitigation – including calling for ... a $30 billion investment in flood defence to raise, protect or buy back at-risk homes.”

An ICA spokesperson told insuranceNEWS.com.au about 1.36 million properties are at risk of flooding and more than 5.6 million face some level of bushfire risk, and there is population growth in areas exposed to extreme weather.

The insured cost of extreme weather has been $4.5 billion a year over the past five years – up almost 70% on the previous five years. ICA says it is projected the cost will grow by 5% annually to $35 billion in 2050.  

“To keep insurance available and affordable, we need to strengthen community resilience, rethink what we build and where we build it, and remove unfair state insurance taxes,” the ICA spokesperson said.  

Some insurers already offer premium reductions if consumers undertake household resilience measures, the council says.

Climate Valuation says withdrawal of insurance can put the economy at risk, and governments must “build resilience into our properties and infrastructure”.  

“Doing so will pay a double dividend, by also putting downward pressure on insurance premiums,” it says.

The group has called for retrofitting of homes and, in extreme cases, buybacks and support for relocation, plus prevention of development in high-risk areas, with all new construction designed to withstand floods, bushfires and severe storms.  

It wants “climate proofing” built into the National Construction Code.

“There is no longer any excuse for actively putting more people in harm’s way by building new housing or communities in areas of high risk ... or by failing to build climate-resilient buildings or infrastructure,” it said. 

See the report here.