Global brokerage Aon has reported 2019 as the year with the fifth largest insured loss over the last 20 years, with climate conditions triggering and sustaining extreme weather events that likely enhanced recent losses, highlighting the need for long-term resilience.
“There was perhaps no other region of the world which encountered more calamitous fire and dangerous heatwave conditions than Australia,” according to Aon’s global Weather, Climate and Catastrophe Insights Report, which identified the ongoing intense multi-year drought and record-setting spring and summer heat as one of the most significant weather-related events in the country.
Aon said the condition likely fuelled the current bushfire crisis which has so far destroyed 3,000 homes, with its economic cost set to be compounded by the issue of underinsurance – particularly when rebuilding older-style properties to comply with the more robust standards of the National Construction Code.
Aon noted that while climate change is a long-term trend causing gradual movements in current averages over time, it will continue to affect all types of weather phenomena and subsequently may result in greater risk of damage across increasingly urbanised areas.
To better cope with extreme events, the brokerage said there is a need to focus on building a more resilient environment, as well as a deeper understanding of the relationship between natural climate cycles.
“The long-term impacts of weather events in 2019 must be considered in policy-shaping in 2020 and beyond, with a focus to improving Australia’s urban environment resilience while encouraging greater preparedness for those living in risk-prone areas at the centre of those discussions,” Aon said. “Government policies relating to development, building codes, practices, materials, and installation methods may need to be revisited to minimise the almost certain future increases in property damage.”
