The challenge of more frequent and increasingly erratic extreme weather events, and the impacts on the insurance industry, will be addressed in a key panel session at next month’s World Insurance Congress in Australia (WICA 2023). 

To be staged at the Melbourne Convention and Exhibition Centre (MCEC) over three days from August 30, it will be hosted by the Australian Insurance Law Association. (AILA) 

Three senior reinsurance executives from Munich Re, Swiss Re and Guy Carpenter & Co will talk about climate change ramifications in a Global Lessons and other Challenges panel on August 31.     

Munich Re Australia Head of New Markets Scott Reeves says how well society responds depends on its capacity to understand and measure the risk of change. 

Swiss Re Head of Australia & New Zealand Trent Thomson says mitigation, adaptation measures, stakeholder engagement with governments, risk transfer and building capacity to accurately price disaster risks all needed to be considered. 

“We must ensure action isn’t delayed and that the focus remains on proactively managing the increasing risk itself. 

“We can also increase our efforts to improve insurance accessibility and penetration by developing more flexible and efficient forms of coverage.” 

Mr Thomson says specialised knowledge and data held by insurers and reinsurers can help ensure future-proof infrastructure remains financially viable. But, he warned, the changing risk environment means governments, businesses and other stakeholders must all participate. 

Guy Carpenter & Co Head of Global Strategic Advisory, Asia Pacific, Karl Jones says there is a great deal of variability around the impacts of climate change across Asia due to differing insurance uptake. 

While Australia and New Zealand have good levels of insurance penetration, “across Asia, we see many markets with significantly less coverage”. 

He says in markets where there is a protection gap, described as a difference between what is insurable and what is insured, societies are less resilient and more vulnerable. Mr Reeves says fewer than half the global losses from natural disasters are currently insured. 

“Continued development of innovative insurance solutions is one crucial aspect to narrowing the insurance gap.” 

While increasing cost of risk and insurance is often suggested as a challenge, Mr Jones says governments can support the industry and communities by changing the way insurance taxes, like stamp duty and emergency services levies, are applied. 

“All stakeholders have roles to play in reducing the cost of risk.” 

This might reduce risk through mitigation measures to be encouraged by a combination of lower premiums and government legislation. 

Mr Jones praises property buybacks in flood-prone areas, as is occurring after the 2022 floods in northern NSW and Queensland. But, he says, it could take many years for those initiatives to make material inroads