Aon says insurers and government must consider innovative ways to address Australia’s high exposure to weather dangers. 

The broker’s latest Climate and Catastrophe Insight report estimates category 4 Cyclone Jasper, the wettest storm on record in Australia, caused $1.02 billion in economic losses last December. 

About 80% of losses were caused by flooding outside the cyclone reinsurance pool’s 48-hour end-of-declaration period, after the pool was activated for the first time. 

Losses in Queensland were exacerbated by the Christmas and New Year floods, which accounted for $952 million in economic losses.  

Aon Senior Analyst and Head of Catastrophe Research and Advisory (Australia and New Zealand) James Knight says such events continue to show the importance of improved mitigation strategies for vulnerable parts of Australia.

“A more strategic approach to resilience and risk mitigation is needed,” he said. “Communities and the industry as a whole must adapt and progress ... overall resilience to extreme weather events.  

“A greater focus on pre-emptive disaster preparedness and closing the insurance gap is needed to better improve the financial stability of Australian households and businesses against severe weather.”  

Mr Knight says insurers “can play a pivotal role” in improving resilience, through collaborations with public and private sector groups. He warns extreme weather events will continue to worsen amid climate change.  

“This trend presents both challenges and opportunities for Australian insurers. Insurers can help Australians better understand and mitigate risk by becoming more resilient to these events ... Innovation in product offerings from insurers, keeping risk assessment based on the current climate, and prioritising the most important resilience-based actions are all needed.”  

The report also records the impact of Cyclone Gabrielle and the Auckland floods in New Zealand in February last year. The two events accounted for more than half of total insured losses for the Asia-Pacific region last year, totalling more than $US2.3 billion ($3.5 billion).  

It says overall global insured losses totalled $US118 billion ($179.39 billion), 31% above the 21st-century average.  

Click here for the report.