Climate Change Events Increasing Claims Paid In Australia
Climate Change Events Increasing Claims Paid In Australia
According to a new analysis from GlobalData, natural disaster events brought on by climate change have increased the number of claims that Australian property insurers have to pay out, increasing their loss ratio from 66.1 percent in 2019 to 84.6 percent in 2021.
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Over the next five years, the loss ratio is predicted to stay above levels of 80%, which will have an effect on the insurers’ profit margins.
The paid claims of Australia’s property insurance segment are predicted to rise at a compound annual growth rate of 4.0 percent from AUD6.0 billion ($4.5 billion) in 2021 to AUD7.3 billion ($5.5 billion) in 2026, according to the report “Australia General Insurance: Key Trends and Opportunities to 2026.”
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According to Ashish Raj, an insurance analyst at GlobalData, “Australia is vulnerable to natural disasters, and the frequency of such incidents has risen recently. Wildfires, floods, cyclones, and earthquakes that have affected the nation during the past two years have led to a sharp rise in property insurance claims.
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Climate Change Events Increasing Claims Paid In Australia
“High Nat-Cat driven losses and the COVID-19 pandemic-related delay have forced property insurers to considerably raise premiums in a previous couple of years. In reality, some customers have been charged a price increase for renewal that is greater than 300 per cent.
As of 10 March 2022, there had been 118,000 property damage claims totaling AUD1.8 billion ($1.3 billion) due to the February 2022 floods, which had a significant impact on New South Wales and Southeast Queensland. In March 2021, flooding in the two states resulted in 107,844 claims totaling AUD $1 billion ($748.7 million).
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Property insurance may become more expensive for many policyholders as a result of the anticipated continued increase in premium rates over the next years.
The anticipated increase is probably going to have a bad effect on the property insurance market, resulting in underinsurance and possibly even non-renewal of policies over time. The Climate Council of Australia predicts that by 2030, 4% of properties won’t be insured.
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