Insurers’ ability to respond to natural disasters will be scrutinised by the Productivity Commission in its inquiry into climate change adaptation.

The inquiry, called by Assistant Treasurer Bill Shorten, will assess current regulations and policies and examine how the insurance market manages the increasing number of catastrophic events.

Climate Change Minister Greg Combet says while the Government is already looking at a clean energy future to reduce the impacts of global warming, there is still more to be done to ensure all Australians are prepared for natural disasters that can’t be avoided.

“Scientific advice shows that even with a moderate degree of warming in coming decades, there is serious risks to coastal settlements,” he said.

“We can’t afford to delay action on adaptation because decisions we are making today will affect our vulnerability to climate change in the future.”

A spokesman for Mr Shorten told insuranceNEWS.com.au the inquiry will look at how climate change affects insurance companies, assessing the response to the growing number of natural disasters and how the industry is adapting.

But this is only a small part of the inquiry, he says. The Natural Disasters Insurance Review is also looking closely at how insurance companies are managing these events.

Former Productivity Commission member, environmental economist and policy analyst Neil Byron has been appointed a part-time associate commissioner to assist the inquiry.

An issues paper will be released by the end of next month.