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Key Points
- Natural disasters have driven Australians’ insurance costs, according to The Australia Institute analysis.
- The LA fires are a tragedy that will have global consequences, said David Richardson from the Australia Institute.
- LA wildfires have killed at least 24 people and left thousands more displaced.
Australians may have to pay more for their home insurance as catastrophic fires in the United States add to a growing list of climate disasters driving up premiums.
Natural disasters have fuelled Australians’ insurance costs beyond inflation, analysis from independent think tank The Australia Institute has shown.
, can still impact Australia as the factors that increase the frequency and scale of natural disasters globally, will also do so within Australia.
This has left disaster-prone regions of Australia almost uninsurable as coverage becomes unaffordable, The Australia Institute senior research fellow David Richardson said.
“The increasing number, scale and intensity of natural disasters like bushfires, cyclones and floods — due to our changing climate — is a global phenomenon which will impact insurance premiums around the world, including here in Australia,” he said.
“The LA fires are a tragedy which will have global consequences for years to come.”
The reinsurance market — where insurance companies buy insurance from bigger, international organisations to mitigate their own losses from natural disasters — also has a role to play.
Hurricane Ian, which ripped through Florida in 2022, made 2023 the third-costliest hurricane season on record, which added to global pressures in the reinsurance sector.
“As the world’s big reinsurers push up premiums to cover their losses from natural disasters, local insurance companies will be forced to do the same,'” Richardson said.
Sewerage, water and power infrastructure have been significantly damaged, and more than 12,000 structures have been destroyed.
The cause of the blaze is still unknown, and while government agencies have not yet provided damage estimates, the event could be one of the US’ most expensive natural disasters.
