Cyclone Alfred is expected to cause billions of dollars in damage, with warnings that rising insurance costs could leave many Australians struggling to recover.
Treasurer Jim Chalmers previously estimated that 4 to 4.5 million people – about 1.8 million homes – could be at risk. The cyclone is set to bring strong winds, flash flooding, and storm surges to highly populated areas that are not traditionally built to withstand cyclone-force conditions.
With more frequent extreme weather events in recent years, insurance costs have continued to rise. What’s worse is that one in five Australians are uninsured or under-insured, according to research from the Australia Institute, leaving many potentially unable to recover from damage caused by the cyclone.
Climate risk expert Karl Mallon warned that insurers may respond to increasing cyclone risks by raising premiums or withdrawing coverage in high-risk areas.
"If you're an insurer and you're insuring a substantial amount of the houses in a town, and a cyclone hits that town, you are up for a lot of payouts. These are things that insurers are concerned about," Mallon said.
The federal government’s Cyclone Reinsurance Pool, designed to reduce insurance costs in cyclone-prone areas, is expected to face renewed scrutiny. Previous disasters, such as the 2022 floods, led to long delays in claims processing, with some residents waiting years for payouts.
Major insurers have stated they are prepared to assist affected customers. The Insurance Council of Australia (ICA) chief executive Andrew Hall has assured the public that they are on standby “to support customers and to help alleviate the stress and uncertainty associated with this event.”
Experts say climate change is shifting cyclone patterns further south, exposing more populated areas to destructive storms.
"We're not used to seeing a cyclone this far south and a population centre this massive," Chalmers said.
Meanwhile, Mallon added that adapting to these changes is critical: "We need to recognise that this may be a new normal that we're going to have to adapt to.”
