Catastrophe facts: reports uncover the cost of disasters

12 September 2022

The Insurance Council of Australia (ICA) released two significant reports on natural catastrophes last week.

The Cost of Extreme Weather, commissioned from leading think tank the McKell Institute, was published alongside ICA’s annual Insurance Catastrophe Resilience Report.

Here are 20 key facts taken from the reports.

In the 2021/22 financial year insurers received 380,760 catastrophe claims, with the total loss estimated at $6.41 billion. The average claim value was $17,000.
The NSW and Queensland flood event in February and March accounts for $5.28 billion in losses, with $3.71 billion of this relating to domestic claims and $1.57 billion commercial.
The “rain bomb” first struck Maryborough in Queensland and slowly travelled south to Sydney, impacting more than 70 local government areas.
Brisbane was the location hardest hit by the catastrophe, with losses of $1.49 billion, followed by Lismore on $508 million, Moreton Bay on $255 million and Tweed on $241 million.
Lismore had the highest per person average loss at $19,028, compared with Brisbane at $1494.
There was further flooding in NSW in July, leading to an additional 20,041 claims and an insured loss of $183 million.
In September last year a magnitude 5.9 earthquake rocked Victoria, including Melbourne. It was not declared an insurance catastrophe but was a significant event. There were almost 18,000 claims valued at $105 million.
Thunderstorms, damaging hail and wild winds struck SA, Victoria, and Tasmania in October last year. There have been 109,650 claims valued at $848 million.
Since 2019 there have been 11 insurance catastrophes declared and more than $13 billion paid out.
Since 2005, Commonwealth expenditure on disaster relief was $24 billion while spending on disaster resilience was just $500 million – or around 2% of all expenditure.
Extreme weather events over the past 12 months cost every Australian household an average of $1532. This includes government expenses paid for through taxes, insurance costs, uninsured damage, and increased prices due to supply chain shortages.
The February/March floods cost each Australian household $525.
Over the last 10 years the average annual household cost of extreme weather has been $888.
By 2050, Australians will be paying $35.24 billion every year (in 2022 dollars) for the direct costs of extreme weather, costing each household $2509.
Since 1967 floods have cost insurers more than $23 billion, with more than $9 billion incurred in just the last 10 years.
Insurance taxes add 20-40% to the cost of home and contents premiums
Since October 2021, the Insurance Council has held more than 25 community engagement sessions for impacted groups.
The most consistent feedback from community forums was the desire for more frequent and clearer communication from insurers about the claims process, timeframes and specifically the progress of their claims.
ICA says that “at present, no region in Australia is uninsurable, however some regions may become increasingly difficult to insure as extreme weather risks grow”.
ICA recommends the following solutions. Short term: abolition of insurance taxes, improved government coordination. Medium term: better land use planning, improved building codes. Long term: investing in mitigation.