Rising premiums for natural disasters

Sydney real estate owners are now being warned of increased insurance premiums unless governmental initiatives are being taken to mitigate natural disaster, according to a Deloitte Access Economics report.

Over the past decade, the total economic cost of natural disasters has averaged AUD18.2 billion a year – 1.2 percent of the average gross domestic product (GDP).

But the report forecasts the cost of natural disasters in Australia will more than double by 2050, averaging USD39 billion per year.

With the rise in natural disaster costs will come an increase in insurance premiums, a spokesperson for IAG told Fairfax Media.

“From our point of view, we obviously go off the risk of an individual area or property. So, if you do nothing, the costs increase and will affect a range of areas including insurance,” the spokesperson said.

“Where we are able to identify a risk [of natural disaster] and reduce it, we are then able to take that into account; so in reducing the risk we are able to reduce the cost of premiums.”

NSW will be one of the states worst hit by rising costs.