IAG has substantially scaled down its property risk in southern Queensland and NSW because it believes the region is exposed to a greater threat of natural disasters.

CEO Michael Hawker told a recent conference in Queensland that the world is headed for more cyclones, storms, floods and droughts as a result of global warming.

He says the most vulnerable areas in Australia are southern Queensland, northern NSW and possibly Sydney, and IAG is cutting its exposure to southern Queensland and northern NSW by reinsuring a much larger proportion of its risk from policies in this area.

And although the huge increase in cyclones and storms in the northern hemisphere –  including a series of hurricanes in the US – has not been repeated in the southern hemisphere, Mr Hawker believes this won’t last.

IAG has undertaken extensive modelling of the effect on Australian weather of an increase in water temperature as part of global warming. It now believes the current pattern of cyclones – cyclones forming in the Coral Sea and hitting northern Queensland before going back out to sea – will change.

The higher water temperatures are expected to cause cyclones to travel much further south before turning back to sea, threatening major population centres in the southeast of the state.