Insurance cover will become increasingly scarce unless action is taken to mitigate the effects of climate change, according to Financial Services Minister Chris Bowen.

Addressing Federal Parliament last week in response to a parliamentary committee report outlining the risks facing coastal Australia, he said the insurance industry understands the need for action on the issue.

The report – Managing our coastal zone in a changing climate: The time to act is now – calls for new governance arrangements and improved management of environmental impacts on the coast.

The value of property exposed to inundation and erosion was estimated by IAG in its submission at between $50-$150 billion.

Mr Bowen told Parliament the insurance industry “understands that climate change is real and it understands that the community, business and government need to act”.

“It is clear that insurance premiums and the availability of insurance will be affected if there is no action on climate change,” he said. “Anything that is insured – whether it be property, crops, livestock, business operations or human life – is vulnerable to weather-related events.”

The report, compiled over 18 months, makes 47 recommendations including the call for a Productivity Commission inquiry into legal and insurance issues relating to coastal climate change impacts.

It also calls for national leadership on the issue, including a Council of Australian Governments intergovernmental agreement on the coastal region that defined roles and responsibilities for coastal zone management.

The report recommends a ban on property development in vulnerable areas and improved emergency management arrangements in the event of a climate-related disaster.

The Insurance Council of Australia welcomed the report in a statement, while Allianz spokesman Nicholas Scofield says massive property damage from storm surge in highly vulnerable areas such as the Gold Coast “has been a risk ever since such areas started being urbanised”.

“Even though the risk has always been there, governments have not regarded it as something they needed to deal with.”

Mr Scofield told insuranceNEWS.com.au that home insurance does not cover erosion caused by actions of the sea, which is “something governments are likely to have to come to grips with over time if significant sea level rise occurs”.

Other local insurers declined to comment on the report when approached by insuranceNEWS.com.au.