STATEMENT OF NEED

The financial and social costs of our buildings failing during, (and after), severe weather is well documented and given inevitable climate change, will increase unless we mitigate these risks. This will see increasing human, social and economic impacts from cyclones and severe storms globally. The geographical areas affected by cyclones are predicted to expand due to higher-thanaverage temperatures, which could put more Australian lives and property at risk with devastating economic impacts.

Climate change research indicates that cyclones are getting bigger and stronger and although modern buildings can protect life, recent damage investigations and insurance claims indicate there is still significant social disruption and economic loss following

The combined Federal Government clean-up costs of Cyclones Yasi, Marcia and Debbie is estimated to exceed $2.7 billion AUD. In addition to this, state governments and local councils also allocate significant funds towards disaster cleanup and recovery efforts, cyclone and storm events. A greater proportion of tropical cyclones may reach further south along Australia’s east and west coastlines. This is particularly relevant to Southeast Queensland and Northern New South Wales as these areas are also experiencing increased hailstorm activity and intensity.

The economic impact already has had a significant effect on communities in northern Australia. In December 2019, the ACCC reported that home, contents and strata insurance is becoming increasingly unaffordable in northern Australia, with the number of households foregoing insurance, more than double the rate of the rest of Australia. The ACCC found that:

• Home and contents premiums in northern Australia are on average double the premiums compared to the rest of Australia, noting that in some areas, the additional insurance costs faced by northern Australian households are much greater.

• The rate of home building noninsurance across northern Australia is approximately 20 per cent, compared to a rate of 11 per cent for the rest of Australia. This non-insurance rate in parts of northern Australia is growing, driven by affordability.

For small communities, towns and regional cities in Northern Australia the affordability of insurance is increasingly recognised as a challenge to liveability and economic prosperity.

Northern Australia is increasing in geo-political importance across a number of platforms from defence to food production and security, and the importance of the north to our national economy is acknowledged as being crucial to Australia’s economic future. The cost of insurance in the north is not just a problem for the north; rather for the whole Australian community that draws on the strength of the economies of the northern regions. Further, these impacts will be even greater as we see severe cyclone and storm events in regions in more population dense regions across Australia.