The cost of extreme weather

From Insurance Catastrophe Resilience Report 2023-24:

The cost of extreme weather in Australia is rising. Three new graphs show just how much the cost of extreme weather is increasing, the growth of extreme weather costs as a proportion of the economy, and the impact on insurer sustaina

The cost of extreme weather is growing in real terms Averaged over the past three decades and adjusted for inflation, insurers paid $2.1 billion a year to policyholders impacted by extreme weather events. However, shortening this time scale by decades illustrates how the cost of extreme weather has grown, to the point where over the past five years it has reached an average $4.5 billion a year, with floods the main driver of this increase.

The trend clearly shows that the cost of all perils except cyclone are growing, and that flood is growing the fastest and is the most significant. The average annual cost of flood alone jumped from $620 million over the 30-year average to $2.2 billion in the past five years. The main factors driving up disaster losses are expanding development and urbanisation.

The upward pressure on premiums from these factors, even before climate change impacts are fully felt, underscores the urgent need to reform land use planning, improve building standards, and implement programs such as property buybacks in the most vulnerable areas.

Hat tip to Nicholas Gruen.