Senate Probes Climate's Toll on Insurance Costs and Access
Senate Probes Climate's Toll on Insurance Costs and Access
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The Senate has launched an investigation into the growing climate risks that are affecting insurance premiums, with a focus on affordability and accessibility.
Deputy leader of the Australian Greens and New South Wales Senator Mehreen Faruqi prompted the initiative by advocating for the formation of the Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability.
This committee aims to scrutinize the challenges of insurance unaffordability affecting certain regions prone to climate-induced disasters and the barriers preventing some individuals from obtaining coverage. Additionally, it will assess how premium increases are linked to climate change and its impact on various insurance products, even those not directly exposed to climate risk.
The committee is also keen to understand the distributional effects of rising premiums across different communities, regions, and demographics. They will examine the role governments play in promoting climate adaptation and resilience measures to reduce insurance costs.
Labor Senator Tony Sheldon remarked that the committee’s efforts would help pinpoint areas where the government can support Australians facing escalating insurance rates.
"Since July 2022, more than half of Australia's local government areas have encountered natural disasters," Sheldon shared in an interview with insuranceNEWS.com.au. "Ensuring community safety before, during, and after these events is a chief concern for the Albanese administration."
The committee is scheduled to deliver its final report by November 19.
The Insurance Council of Australia (ICA) plans to review the committee’s terms of reference closely. According to the ICA spokesperson, the insurance industry has been actively participating in the House Economics Committee's inquiry into the responses to the 2022 flood claims, which also considers affordability and the efficacy of mitigation strategies.
“The ICA will coordinate with the Senate committee to streamline efforts and avoid redundancies with the work being done by the House Economics Committee,” the spokesperson added.
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Knowledgebase
Premium: The amount paid for an insurance policy, usually on a regular basis, to maintain coverage.
