Australian Insurance Companies Slow On Climate Change As Pacific Braces For Infrastructure Damage

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Labor’s top brass are touring the Pacific to hear about how climate change will affect the region, but closer to home Australian insurance companies have been found to be unprepared for the coming crisis. Thom Mitchell reports.

A new report has found that Australian insurers are lagging behind in recognising the financial risks created by climate change, and that they don’t appear to be on-board with the globally agreed goal of limiting the rise in average temperatures to less than two degrees.

The release of the World Wildlife Fund report this morning comes as Labor heavyweights, including Opposition Leader Bill Shorten and his Deputy Tanya Plibersek, tour the Pacific to investigate how climate change will impact the vulnerable region.

They’re likely to come under renewed pressure to side with Pacific leaders in arguing for a global goal of limiting temperature rises to 1.5 degrees rather than 2, with forecasts indicating Pacific nations will be left acutely at risk from climate change.

Closer to home it appears Australian insurance companies are not factoring in the implications of commitments made by 195 governments to work towards the two degree goal.

“No discussion was found by the Australian insurers about the importance of a 2 degree target in their primary disclosure documents and no self-contained public policies or statements have been identified,” the WWF report said.

The report analysed publicly available statements and policies for mentions of climate change from Australian insurers — IAG, QBE and Suncorp — and compared them with those of three international firms, Allianz, Prudential Financial and AXA.

Four Australian banks — Westpac, ANZ, CBA, and NAB — were also analysed, and were found to be more vocal and transparent about their position on climate risk and the two-degree target.

“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,” the report said.

In spite of this, WWF found, “None of the Australian insurance companies seem to have self-contained public climate change statement in their annual reviews or sustainability reports.”

The environmental NGO compared this stance to the international insurance companies, finding that foreign firms had warned more explicitly, more publicly, and more often about the risks that hostile weather and the diminishing value of fossil fuel stocks are creating.

This morning Labor leader Bill Shorten touched on similar themes, noting in Port Moresby that “rising sea levels are threatening the livelihoods and homes of our [Pacific] neighbours”.

As New Matilda reported in June, one study in Nature has already projected that the clean-up bill for under-developed South Pacific island nations alone could be as high as $21.9 billion, given their “acute vulnerability to climate change”.

Kiribati, the Marshall Islands, and Tuvalu were deemed particularly at-risk, with researchers from the University of New England finding that more than 95 per cent of their built infrastructure, by value, is located within 500 metres of the typically low-lying coast.

This morning WWF sought to highlight the unholy confluence between the increasing need for insurance, and the expected difficulty in securing it in a climate-changed world.

“The insurance industry will be affected through increased claims, reputational damage, decline in insurance affordability, and an increase in uninsurable sectors or geographies,” the WWF study notes.

The Pacific will be among the ‘geographies’ hardest hit, and Shorten is visiting both Kiribati and the Marshal Islands as part of his tour.

The ABC reports that this morning Shorten said “the message [I am] already getting loud and clear is that climate change is a first-order issue for our neighbours and we need … Australia to have serious policies, credible policies, which will help to contribute to mitigating the effects of climate change in our region”.

The WWF stressed that the policies of Australian insurance companies are also integral to efforts to limit the extent and impact of climate change and help in adaptation efforts.

“The private sector has a key role to play” in driving action toward the internationally agreed two degree target, the report said. “Communicating this target helps do that and also draws attention to whatever specific actions are in place to support it.”

“It is hoped that corporate discussion of a 2 degree Celsius threshold would lead to commitments and specific targets and actions.”

Thom Mitchell

Thom Mitchell is New Matilda's Environment Reporter.

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