View of damaged houses along Terrigal Beach on the Central Coast.

Climate change, rising insurance costs, food security singled out in CSIRO megatrends report

Insurance is set to get much less affordable in Australia, with the cost of natural disasters forecast to triple over the next 30 years.

The CSIRO’s decadal megatrends report, published today, warns that extreme weather caused by climate change will cost the country more than $39 billion annually by 2050.

The report is intended to identify the key global forces that will shape our lives in the coming decades, with “the view to guide long-term investment, strategic and policy directions,” according to the CSIRO.

Australia’s north is already hardest hit by rising insurance premiums, with home and contents insurance costing around 1.8 times more than in the south, as of 2020.

And on average, almost double the number of households above the Tropic of Capricorn — around 20 per cent — are already foregoing insurance, compared to those in southern Australia, the report states, citing data from the ACCC.

The megatrends report also echoes recent warnings from the Insurance Council that at least $30 billion will need to be spent to protect coastal communities from sea level rise, and on relocating some vulnerable communities.

Globally, as many as 150 million people living in coastal areas could be vulnerable to the impacts of sea level rise by 2050, but that figure could be far more if Antarctica becomes less stable, the report says.

What happens to Antarctica will have a big bearing on sea levels.(Gary Bembridge / Flickr CC BY 2.0)

The report, last released a decade ago, is a synthesis of the CSIRO’s own data and independent data, according to Stefan Hajkowicz, principle scientist in CSIRO’s strategy and foresight team.

“With climate change, some of the things we were talking about as predictions in 2012 have become a reality for many Australians,” Dr Hajkowicz said.

“The floods have been very tough, but the other ones are heatwaves and droughts.

“Heatwaves are actually more deadly [than floods]. We can see what’s happening in Europe now, it’s pretty shocking.”

$2 billion investment needed over 5 years

Insurance Council of Australia chief executive Andrew Hall, who wasn’t involved with the CSIRO report, said insurance prices would continue to rise unless there was significant investment to build resilience and adapt our infrastructure to the threat of climate change.

“Insurance [puts a price on] risk and we’ve been consistently highlighting over the last decade that there have been more and more extreme weather events,” Mr Hall said.

There are both short and longer-term strategies to adapt our housing and infrastructure to climate change, and both need to be undertaken simultaneously, Mr Hall said.

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