Australia’s banking and insurance regulator has estimated the country should be spending about $3.5bn a year to limit damage from climate-related natural disasters, warning the cost of responding to them after the fact is likely to be 11 times greater.
In a speech on Wednesday, Geoff Summerhayes, an executive board member of the Australian Prudential Regulation Authority, said the cost of pre-emptive action to avoid the impact of disasters exacerbated by the climate crisis was far cheaper than dealing with the aftermath.
Addressing the issue of rising insurance premiums in northern Australia due to an increasing number of claims caused by storms and cyclones, Summerhayes said Apra was concerned general insurance could become unaffordable or unavailable in parts of the country.
He said it heightened the need to both cut greenhouse gas emissions and increase community resilience to extreme climate events, such as last summer’s catastrophic bushfires.
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“Investing in the types of resilience, mitigation and hazard reduction measures needed to better protect Australian communities – and keep insurance affordable and accessible – comes at a cost,” he told an Australian Business Roundtable webinar. “But as we witnessed last summer, failing to take action can be far more costly in the long run, and the price paid is often far more valuable than can be measured in dollars.”
Summerhayes cited research by the business roundtable that predicted the total economic cost of natural disasters in Australia would reach $39bn a year by 2050. Based on evidence from the US that every $1 spent on resilience measures saves up to
$11 in response and recovery costs, he said covering those losses would require the community to invest about $3.5bn a