How Bushfires and Floods Are Boosting Insurance Costs in Victoria: Understanding the Impact of the Climate Crisis

Pascoe and Johanason have moved from the mountain and now reside in Nillumbik. Pascoe notes that the storms weakened many trees on Mount Dandenong. Unfortunately, these trees continue to fall, disrupting power lines and impacting lives in the community.

Pascoe has faced several challenges in her business due to power outages. “People are not properly compensated,” she said. "Businesses are losing produce, and our insurance costs have increased significantly since the storms."

Data from Finity shows that many others share Pascoe’s experience. The agency analyzed about 40,000 online insurance quotes from Melbourne over the past six years. This research highlights the rising costs of building insurance in the area. For example, the average premium in Whitehorse is around $1,609, which is nearly three times less than in the Yarra Ranges Shire.

Stephen Lau, the principal of a local school, explained that the most significant climate-related insurance events in recent decades include floods, bushfires, and the 1999 Sydney hailstorm, which resulted in losses of $8.9 billion. He pointed out that insurers often pass these rising costs down to consumers, increasing premiums.

Recent climate data reveals a worrying trend. Over the past five years, Australia has seen an average of $4.5 billion in insured losses from extreme weather, which is 64% higher than the previous five-year average. This indicates that severe weather is becoming more frequent and costly.

Experts like Andrew Hall, CEO of the Insurance Council of Australia, are advocating for a nationwide flood defense fund. Hall proposes a 10-year, $30 billion initiative, funded by both federal and state governments, to improve flood defenses and assist communities in adapting to the increasing risks of climate change.

As communities face these challenges, the conversations around climate preparedness and insurance are more pressing than ever. Adapting to a changing environment is essential for safeguarding our homes, businesses, and futures.

For more insights on climate impacts and insurance, you can explore reports from the Insurance Council of Australia.

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