Climate Change and Rising Insurance Premiums: Insights from IAG

A report from IAG found that severe storms, including hailstorms, are predicted to hit the most populated regions in the southern parts of Australia. IAG's Chief Financial Officer, William McDonnell, stated that climate change would play an increasing role in rising premiums unless urgent actions were taken.

Key points from the report include:

• Severe convective storms, including hailstorms, are among the most frequent and damaging weather hazards in Australia.
• Recent research shows a noticeable rise in large hail events, particularly in major urban areas, with evidence suggesting a southward expansion of hail-prone regions and more hail days along the Melbourne-Sydney-Brisbane corridor.
• Atmospheric conditions have become increasingly favourable for hail over the past 30 years in Australia's most densely populated regions.

McDonnell emphasised that natural events in Australia are becoming more intense at both ends of the weather spectrum, with storms accelerating faster and droughts becoming worse. He noted that while there are fewer mild rainy days, there are more intense downpours.

To address these challenges, IAG has called for urgent action to improve the resilience of buildings and infrastructure to reduce risks in the long run. The report suggests that governments should establish consistent state and federal guidelines on natural hazard risk tolerance and support a national property-level hazard database to inform development decisions and building codes that reflect changing hazard profiles.

For homeowners and farmers, this information highlights the importance of staying informed about climate risks and ensuring that insurance coverage is adequate to protect against the increasing likelihood of severe weather events.