City University London: Counting Cost of Australian Bushfires
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- Cass reinsurance expert urges government and policymakers to think beyond immediate impact of disaster
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In this short media advisory she argues the Australian government and policymakers need to think beyond the immediate response to the bushfire crisis and consider how to rebuild communities afterwards.
"Insurance lets us pay for rebuilding in the aftermath of disasters and while nothing can bring back the personal and sentimental items lost, having the capital to rebuild your home is vital to rebuild lives and communities.
"The ratings agency AM Best considers the
"Much of the damaged land will simply not have been insured. For example, key unique ecological sites, such as
"If it is a business or a home, the owner pays for insurance. But who owns the nature reserves and ecological sites and how can we pay for products to protect them? There are precedents in how we use insurance to support developing economies against drought, flood and hurricane, from which we can learn. Markets and global capital can be harnessed to help governments and international wildlife organisations to generate novel products that will support them to protect the environment."
She said that the fires may recur and while the damage to insured properties from this disaster are still relatively contained, because the fires have not gone through a city, nonetheless, we should expect insurers to look carefully at how they price fire insurance in the future.
"Those affected areas will be seen as higher risk, and so prices should be expected to rise. If we want people in fire risk areas to be able to afford insurance in future we will need innovative collaborations between governments and insurance markets to subsidise that pricing - which has consequences in itself - and also we will need to ensure that insurance payments are not just used to 'build back' but also to build back BETTER, meaning in a more resilient way that can prevent loss or damage during fire."
"We depend on insurance as a vital mechanism underpinning our economies. Without insurance you can't get a mortgage on your home, or take out loans for your business. But if disasters of such unprecedented scale and loss are becoming more frequent, then insurance will have to rise in price to cover the costs of the claims, which may make it unaffordable. If so, we will see serious economic impacts arising from under-insurance. It is therefore vital, in the face of growing catastrophe, that the insurance industry and governments work together to address insurance, insurability, and the associated resilience we are going to need in our building and land use planning. The Australian bushfires are an important wake up call to us all, globally, about the implications of climate change for economic safeguards that we take for granted."
All quotes can be attributed to
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