Close×

Last year was one of Australia’s biggest for insured losses with payouts already topping $1.2 billion.  Aon head of APAC Analytics, Peter Cheesman, explains why local policy-makers must recognise that climate change is not an ‘event’ but a long term trend.

Australia recorded one of its most notable years for weather disasters in 2019, and is already the fifth largest insured loss year over the last 20 years In the past 15 years, Australia has experienced eight of its 10 warmest years on record.

There was perhaps no other region of the world which encountered more calamitous fire and dangerous heatwave conditions than Australia.

The year initially saw record flooding that inundated Townsville in North Queensland in February. More than 30,000 insurance claims were filed, with payouts topping $1.269 billion.

One of the most significant weather-related events, however, was the ongoing intense multi-year drought and record-setting spring and summer heat which led to conditions which are likely to have contributed to the destructive bushfires in New South Wales, Queensland, Victoria, and South Australia.

An important climatological phenomenon called the Indian Ocean Dipole (IOD) was a key driver of significant weather-related impacts across the country. 

According to the Australian Bureau of Meteorology the 2019 positive IOD – where cooler than average temperatures in the eastern half of the Indian Ocean influenced exceptionally dry conditions in Australia – was the strongest such event since 1997.

The 2019 spring and early winter months marked Australia’s driest in 120 years. In eastern Australia, the bushfire season began much earlier than usual and became one of the most significant in terms of spatial area burned due to the drought severity and widespread availability of dry, burnable fuels. On 18 December we recorded our hottest national average temperature on record: 41.9°C.

The total extent of the damage from the 2019-20 fire season remains to be fully understood although the NSW Rural Fire Service estimates that there have been at least 3000 homes lost, with nearly 2400 of those located in NSW (as at 27 January 2020).

What will compound the economic cost of the destroyed structures and homes in these fires is the issue of underinsurance, particularly when rebuilding older-style properties to comply with the more robust standards of the National Construction Code.

The catastrophic impact of 2019’s weather events on our community and people may be as detrimental as, if not more detrimental than, the economic loss, which is likely to be extreme and perhaps unprecedented.

While it should be noted that climate change is a long-term trend and not an ‘event’, resulting in gradual movements in current averages over time rather than sudden dramatic shifts, this will continue to affect all types of weather phenomena and subsequently may result in greater risk of damage across increasingly urbanised areas.

As governments, industry bodies and the private sector balance an understanding of the science with smart business solutions, this may lead to new advances that lower physical risk and improve overall awareness.

Projected changes in many weather extremes highlight the need to focus on building a more resilient future built environment to better cope with extreme events.

The long-term impacts of weather events in 2019 must be considered in policy-shaping in 2020 and beyond, with a focus to improving Australia’s urban environment resilience while encouraging greater preparedness for those living in risk-prone areas at the centre of those discussions.

Government policies relating to development, building codes, practices, materials and installation methods may need to be revisited to minimise the almost certain future increases in property damage.