A Federal Government inquiry into insurance gaps in coastal regions has been included in the Natural Disaster Insurance Review’s terms of reference as reports show sea level rises could cause more than $226 billion damage to assets on the Australian coast.

The latest Climate Change Risks to Coastal Settlements and Industry report says all levels of government need to be aware of the potential costs of climate change and warns the cost of natural disasters could double over the next 20 years.

The report says if expected sea level rises of 1.1 metres by 2100 become a reality it could cause $80 billion in damage to commercial buildings, $6.7 billion to light industrial and $72 billion in residential areas.

In response to growing concerns highlighted in November last year by a parliamentary committee on managing coastal zones and the impact of climate change, the government said it agreed that an inquiry into insurance gaps is needed.

A Climate Change Department spokesman says the Federal Government’s National Disaster Insurance Review panel is looking at sea level rises in response to concerns over flood cover availability.

“The review will also consider issues such as the availability of flood-mapping data and to what extent land use decisions take flood risk into account,” he told insuranceNEWS.com.au.

Climate change analyst David Spraat says in his blog that the Government has grossly underestimated the cost of rising sea levels.

He says the sea level rises are more likely to be in the vicinity of 2 metres. “The big problem is that 1.1 metres is the wrong figure by a wide margin, with serious implications for the efficacy of the risk management and planning such research should underpin.

“The damage to buildings and infrastructure impacted by a 2-metre rise and associated storm surges is likely to be more than double the $226 billion figure established in the recent report, and it seems extremely foolish to neither recognise that possibility nor plan accordingly.”

Climate Change Minister Greg Combet says coastal assets at risk from the combined risks of inundation and erosion include up to 8600 commercial, 6200 light industrial and up to 35,000 kilometres of roads and rail networks.

Mr Combet says some future adaptation strategies include making changes to current planning regimes as well as improving building codes in urban environments.

The Insurance Council of Australia says it’s still waiting for further review from the Government regarding insurance in coastal areas and “remains prepared to engage” on the issue.

A spokesman says gradual sea level rises are currently not a risk covered in most insurance policies, but that the council remains committed to assisting all levels of government in their policy deliberations concerning coastal risk.

“This includes a strong need for appropriate land-use planning to prevent present vulnerabilities from growing adaptation and mitigation efforts to protect infrastructure and private properties that may already be exposed as a result of land-use and development decisions,” he told insuranceNEWS.com.au.