Australians are in the dark about the risks climate change poses for the local insurance industry because Australian insurers don’t disclose enough information, a new report claims.
According to the study by WWF, Australian insurers IAG, QBE and Suncorp tell customers far less than overseas insurers about the risks climate change could pose to their businesses, and also shy away from public statements about the need to act on global warming more than their international peers.
Climate change poses risks for the insurance industry through increased claims and potential impacts on investments held by the insurer to pay on future claims, and could cause premium increases so steep that homes in some fire, flood or cyclone prone areas could become uninsurable.
A study presented to the Actuaries Institute last year, “Can actuaries really afford to ignore climate change?” found claims were likely to rise but that it was difficult to predict by exactly how much. Bushfire claims were calculated to rise by between 29% and 116% by the end of the century, cyclones by up to 230% and river flooding by between 7% and 54%.
“Global warming will have significant impacts on the insurance industry through increased claims, reputational damage, decline in insurance affordability, and an increase in uninsurable sectors or geographies,” WWF spokeswoman Monica Richter said.
“Without full public disclosure of their climate-related risks and management strategies, Australian consumers and shareholders are left vulnerable to unexpected costs and regulatory shifts.”
WWF argues Australian insurers should publicly disclose their position on climate change and how they are managing their risks and actively advocate for ambitious climate change policies.
“Given the insurance industry’s expertise in risk management, weather-related impacts and prominent position in the business community, insurance companies have a responsibility to reduce risks and costs to consumers,” it says.
The research compared public climate change-related policies and statements from general insurers IAG, QBE and Suncorp with three international insurance companies, Allianz, Prudential Financial and AXA.
It found only QBE disclosed climate-related business risks and none of the Australian insurers had made public statements on climate change policy.
In September, Mark Carney, the governor of the Bank of England, warned a meeting of leading insurers at Lloyd’s of London that climate change would lead to financial crises and falling living standards unless the world’s leading countries did more to ensure that their companies came clean about their current and future carbon emissions.
And the WWF study came after a report earlier in the year by The Climate Institute, which questioned why there had been no official examination of how climate change might affect Australia’s financial system.
