Chapter 1Introduction
1.1On 16 May 2024, the Senate resolved that the Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability be established to inquire into and report on:
(a)the unaffordability of insurance in some regions due to climate-driven disasters;
(b)the unavailability of insurance for some people due to climate-driven disasters;
(c)the underlying causes and impacts of increases in insurance premiums;
(d)the extent to which increased climate risk is being priced into insurance products not exposed to climate-driven risks;
(e)the distributional impact of increases in insurance premiums across communities, demographics and regions;
(f)the role of governments to implement climate adaptation and resilience measures to reduce risks and the cost of insurance;
(g)how the pricing of risk from climate-driven disasters can be better redistributed across the economy; and
(h)any other related matters.
1.2The committee was required to report by 19 November 2024. On 19 November 2024, the Senate agreed to extend the reporting date to 26 November 2024.
1.3Details of the inquiry were made available on the committee's webpage and the committee invited government departments and agencies, organisations and individuals to provide submissions.
1.4The committee received 56 public submissions which are listed at Appendix 1 of this report, and held the following public hearings:
8 August 2024, in Ballina
9 August 2024, in Brisbane
20 September 2024, in Sydney
30 September 2024, in Melbourne
1 October 2024, in Canberra
9 October 2024, in Canberra.
1.5A list of the organisations and individuals who attended as witnesses at these public hearings can be found in Appendix 2. The public submissions, additional information received by the committee and Hansard transcripts are available on the committee's website.
Approach to the inquiry
1.6In conducting this inquiry, the committee set out to understand the experiences of communities directly affected by climate-driven disasters with insurance.
1.7The committee held its first public hearing in Ballina, in the Northern Rivers region of New South Wales, where it heard from people in Ballina, Lismore, Tweed Heads and surrounding areas, who were impacted by the devastating Northern Rivers floods in 2022.
1.8The committee heard about the shattering impacts that the disaster had on individuals and the broader community, as well as many stories of bravery, generosity and hope.
1.9It also heard about the importance of insurance in disaster recovery, and the impact on people when they do not have access to the benefits of prompt and sufficient insurance cover. Concerningly, the committee heard that many of the impacts stemming from the floods continue to be felt to this day, with insurance claims still to be finalised, and housing and infrastructure still waiting to be repaired.
1.10Soon after commencing the inquiry, it became apparent to the committee that the issue of increasing insurance costs is a complex one, involving climate risk and factors present in the Australian insurance market that need to be addressed.
1.11After hearing from local governments, consumer groups, legal services, researchers, expert bodies and insurance companies around the country, the committee was able to gain a more fulsome understanding of growing climate risk, and other challenges contributing to increasing costs of insurance, as well as possible solutions to these issues.
Report structure
1.12This report is set out in four sections. The first part (comprising chapters 2 and 3), explores the impact of increasing natural disasters and the rising cost of insurance on individuals and the community.
1.13The second part (comprising chapter 4) considers the challenges within the Australian insurance industry, which are contributing to the rising cost and unavailability of insurance in some regions.
1.14The third section (comprising chapter 5) sets out a range of solutions that were proposed by submitters to target insurance affordability and availability, noting that a multifaceted approach is needed to address this complex issue.
1.15The last section (comprising chapter 6) contains the committee's views and recommendation to target the concerns brought to its attention.
Notes on references
1.16References to the Committee Hansard may be references to a proof transcript. Page numbers may differ between proof and official transcripts.
Acknowledgements
1.17The committee sincerely thanks all those who have contributed to the inquiry by making submissions, providing additional information, and appearing at public hearings.
1.18In particular, the committee wishes to acknowledge the individuals who bravery shared their stories, amidst their grief and trauma, following climate‑driven disasters. We thank them for their role in shaping this inquiry and we hope that implementation of the committee's recommendations will go some way to addressing the challenges they have faced in the aftermath of natural disasters in this country.