The Inter-governmental Panel on Climate Change (IPCC) asserts that change is occurring and will continue to occur into the future, driven in part by anthropogenic activity. The IPCC considers that the frequency and severity of extreme weather events will change into the future, with uncertain magnitudes and localised impacts.

The changes to the nature of extreme weather events, brought on by climate change, will occur in an environment where extreme weather has already become more devastating and expensive for many communities.  The increasing migration and expansion of Australian communities, and their insured assets, into locations with significant exposures to extreme weather has already contributed to growth in disaster losses over the last 40 years. Increased losses have been most notable where population increases have not been accompanied by implementation of risk appropriate building codes, land-use planning, and localised defensive infrastructure.

The role of general insurance is to assist policyholders to recover from losses, such as those caused by extreme weather events. With expertise in risk management developed over hundreds of years of operation, general insurers play a critical role in communicating, managing and responding to the the risks that many policyholders face today, as well as how those risks may evolve under a changing climate.

It follows that the general insurance industry naturally supports community policy adjustments that will enhance resilience to extreme weather, as well as measures that may assist to reduce emissions.

Using the industry’s expertise in the pricing, transfer and management of risk, the following activities being undertaken by the industry are intended to assist policy-makers and communities to address the implications of climate change:

  • Maintain the strong prudential foundations underpinning the Australian market, to ensure that the industry continues to be able to respond to large disaster events when they occur.
  • Manage the commercial, individual and community-level risks posed by climate change via innovative risk-transfer solutions.
  • Ensure that risk-transfer solutions deliver competitive price signals, through risk based pricing, that assist communities and decision makers to recognise and adapt to current and emerging extreme weather risks.
  • Assist to increase community resilience over time by sharing industry expertise that will help policy decision makers and the community to:
  • Reduce exposures by making development control decisions for exposed locations that are appropriate for both the location and the planned life cycle of the development, accounting for the increased risk posed by the changing climate.
  • Reduce vulnerability to natural disasters by implementing localised defensive infrastructure where necessary to achieve an acceptable residual risk of damage to an exposed community.
  • Reduce vulnerability to natural disasters by improving building codes to ensure that built structures remain viable following predictable events over their planned life cycle, accounting for the increased risk posed by the changing climate.
  • Assist policy-makers to understand the long term economic implications of climate change, as well as the benefits of any appropriate emission mitigation schemes, by providing credible data on current exposures and vulnerabilities, as measured by the general insurance industry.
  • Assist to implement practical solutions to emission reduction strategies, through the consideration of risk-transfer products that incentivise solutions to be brought to market by other industries. 


This policy was approved by the ICA's Board on August 4, 2016