July 2020

The Nation Reviewed

Weathering the cost

By Bronwyn Adcock
Illustration by Jeff Fisher
After 300 inquiries into natural disasters and emergency management, insurers are taking the lead

According to a database kept by the Bushfire and Natural Hazards CRC, since 1886 Australian governments have held more than 300 inquiries and reviews into natural disasters and emergency management. The decade leading up to 2017 was particularly jam-packed, with 90 such inquiries, delivering more than 2000 recommendations.

In the wake of this past catastrophic fire season, where around 3100 people lost their homes, 33 their lives, and an area the size of Syria burned, Australians may well be questioning just how much we’ve learnt from this abundance of examination.

The Royal Commission into National Natural Disaster Arrangements, the latest inquiry, was called by Prime Minister Scott Morrison in February. It was a response to the fires, yet given a much broader remit, to examine how we can better prepare for and respond to all kinds of natural disasters. Public hearings began in late May, with witnesses appearing via oddly framed video streams from home offices and spare rooms, the country still in lockdown.

On day one, in the afternoon session, representatives appeared from Australia’s biggest insurer, IAG Limited, and the professional body for actuaries, the Actuaries Institute. Both gave submissions that identified a fundamental flaw in our response to natural disasters; Australia still spends a disproportionate amount of money mopping up after a disaster, and not enough on risk mitigation and adaptation – we keep trying to shut the gate after the horse has bolted. 

“Government funding should further prioritise risk reduction which will reduce the need to spend on disaster recovery,” said the IAG submission. 

Another major insurer, Suncorp, which gave a submission but was not asked to appear, was even more direct: “When it comes to natural disasters, Australia is currently stuck in a cycle of disaster, rebuild, recover, repeat.” 

This is not a new point; it’s been made in numerous other reports and inquiries, most notably by the Productivity Commission, in an inquiry called in 2014 by then treasurer Joe Hockey. Its report, “Natural Disaster Funding Arrangements”, found we “over-invest in post-disaster reconstruction and underinvest in mitigation that would limit the impact of natural disasters in the first place”.

(In 2018, a taskforce working under Peter Dutton’s Home Affairs department developed a National Disaster Risk Reduction Framework – on paper, a proactive approach to disaster management. But to date, no implementation plan has been published.)

For insurers, who must pay out claims when a natural disaster hits, and actuaries, who must ensure insurers remain financially viable, the extreme weather patterns emerging as the climate changes are raising the stakes and increasing the urgency to act. 

Mark Leplastrier, from IAG, told the commissioners the company has partnered with the US-based National Center for Atmospheric Research to better understand severe weather in a changing climate. He said this research shows “intense cyclones will become more frequent” in Australia and there will be a “broadening of the areas affected by cyclone”, including a move into north-eastern New South Wales. Bushfire risk will increase in all locations. 

It has released this research, he said, because “there’s an enormous amount of activity right now in disclosing climate-related financial risk for the finance industry” and it wants its work “to act as a base for others to build on, and hopefully we can collectively move forward, establishing more centralised and accurate sources of information”.

Likewise, the Actuaries Institute, which says climate change “poses a serious risk to industries and financial institutions”, told the commission it has set up the Australian Actuaries Climate Index, a tool that tracks trends in extreme weather and is available to actuaries, companies and the general public. 

But there is a flipside to this kind of data-gathering. Insurers are increasingly using it for risk-based pricing – increasing insurance premiums for specific locations, based on their exposure to extreme weather events. It means people living in some areas are finding their premiums becoming more expensive, and potentially unaffordable. 

Insurance affordability was barely touched on by the commissioners (there is another inquiry by the Australian Competition and Consumer Commission under way into this issue), but in the written submissions it was identified as a major issue for government to address. The Actuaries Institute said that “mitigation and adaptation measures can reduce insurance premiums”.

Risk management company Risk Frontiers gave evidence about the cost of this bushfire season. In terms of building damage, it is expected to be comparable to the most damaging fire season – if not the worst – in the past century. However, in a sobering reminder that, as bad as it was, it won’t be the costliest natural disaster we see, Risk Frontiers also presented an analysis of the top 20 postcodes in Australia that pose the greatest risk for financial loss of insurable assets. The risk in all 20 areas was from either flood or cyclone – bushfire did not even make the list.

The first day’s hearing had almost ended when Sharanjit Paddam, representing the Actuaries Institute, interjected with a notably non-financial point.

“There’s some things you can’t compensate for,” he said. “Insurance is almost the piece at the end that tries to financially compensate people”, but it’s a “suboptimal outcome because people’s lives, even if they’re insured to the full extent of the damage, are very adversely affected by these natural disasters”.

This is not news to the communities that experienced this summer’s bushfires, where high levels of trauma and distress still exist.

In Malua Bay, on the south coast of NSW, retiree Robyn Butcher is back living in her suburban cul-de-sac, where her home is one of only four on the street that survived the fires. Insurance has paid for her destroyed sheds and fences, and she finally has the soot out of the house. But nothing will ever compensate for the damage to her lungs from bushfire smoke, and the terrifying experience of cowering on a beach, watching the fire tear through her town, convinced she was going to die. She tells me that when she heard a news report from the royal commission that said these kind of bushfires could reoccur, she thought, I’d rather die than go through that again.

Bronwyn Adcock

Bronwyn Adcock is a freelance journalist whose work has appeared in The Griffith Review and The Saturday Paper, and on the ABC. She is the author of Currowan.

There is nowhere quite like The Monthly. We are told that we live in a time of diminished attention spans; a time where the 24-hour-news-cycle has produced a collective desire for hot takes and brief summaries of the news and ideas that effect us. But we don’t believe it. The need for considered, reflective, long-form journalism has never been greater, and for almost 20 years, that’s what The Monthly has offered, from some of our finest writers.

That kind of quality writing costs money, and requires the support of our readers. Your subscription to The Monthly allows us to be the home for the best, most considered, most substantial perspectives on the state of the world. It’s Australia’s only current affairs magazine, an indispensable home for cultural commentary, criticism and reviews, and home to personal and reflective essays that celebrate and elevate our humanity.

The Monthly doesn’t just comment on our culture, our society and our politics: it shapes it. And your subscription makes you part of that.

Select your digital subscription

Month selector

From the front page

Kim Williams seen through window with arms half-raised

The interesting Mr Williams

At a time when the ABC faces more pressure than ever before, is its new chair the right person for the job?

Exterior of the Department of Treasury, Canberra

Tax to grind

Tax reform should not be centred on what we want, but on who we want to be

Rehearsal for the ABC TV show ‘Cooking with Wine’, March 13, 1956

Whose ABC?

Amid questions of relevance and culture war hostilities, the ABC’s charter clearly makes the case for a government-funded national broadcaster

Tony McNamara in New York City, January 2024

Pure things: Tony McNamara

How the Australian screenwriter of ‘Poor Things’, who cut his teeth on shows such as ‘The Secret Life of Us’, earnt his second Oscar nomination

In This Issue

Image of Donald Trump mask

American carnage

Donald Trump and the collapse of the Union

The man inside and the inside man

Crime, punishment and indemnities in western Sydney’s gang wars

Image of Satu Vänskä, Australian Chamber Orchestra

Fermata: Musical performance in lockdown

What becomes of the communion of classical musicians, composers and audiences during social isolation?

Still from ‘Contempt’

The death of cool: Michel Piccoli, 1925–2020

Re-watching the films of the most successful screen actor of the 20th century


More in The Nation Reviewed

Illustration by Jeff Fisher

Letter from Dunkley

As a byelection draws the nation’s focus to the scrappy suburb of the author’s childhood, a visit reveals the damage wrought by the housing crisis

Illustration by Jeff Fisher

Lines in the sand

By failing to take Indigenous knowledge seriously, a scientific paper speculating on the origin of WA desert ‘fairy circles’ misses the mark

Illustration by Jeff Fisher

Serving time (after time)

Australian citizens are being held in supervised facilities after they have served their prison sentence, amounting to indefinite detention

Illustration by Jeff Fisher

Might as well face it

Lively discussions take place around the country every week on ethical non-monogamy, love addiction and how much sex is too much


Online latest

Osamah Sami with members of his local mosque

In ‘House of Gods’, Sydney’s Muslim community gets to be complicated

Plus, Barnaby Joyce shines in ‘Nemesis’, Emma Seligman and Rachel Sennott deliver ‘Bottoms’, and Chloë Sevigny and Molly Ringwald step up for ‘Feud: Capote vs. The Swans’.

International Film Festival Rotterdam highlights

Films from Iran, Ukraine and Bundaberg were deserving winners at this year’s festival

Two women on a train smile and shake hands

‘Expats’ drills down on Hong Kong’s class divide

Plus, Netflix swallows Trent Dalton, Deborah Mailman remains in ‘Total Control’ and ‘Vanderpump Rules’ returns for another season

Image of a man playing music using electronics and the kora (West African harp)

Three overlooked albums of spiritual jazz from 2023

Recent releases by kora player John Haycock, trumpeter Matthew Halsall and 14-piece jazz ensemble Ancient Infinity Orchestra feel like a refuge from reality