Traditional insurance models are “no longer fit for purpose” and cannot deal with the impact of climate change, according to a report released today.

The Australia Institute says soaring insurance premiums are “the here and now cost” of global warming, hurting many people.

In response, it recommends tougher action on fossil fuel projects and faster decarbonisation, but it says the cyclone reinsurance pool “will not be sufficient” and other intervention “may be required”.

“Impacts from climate change are non-linear. They are catastrophic in nature, and traditional, linear insurance models of calculating and spreading risk are no longer fit for purpose,” senior fellow at the institute Stephen Long said.

“Even considering only capital city insurance costs, the cost increases are significant and place enormous pressure on inflation.”

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