Mehreen Faruqi (NSW, Australian Greens) Share this | Hansard source

I present the final report of the Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability together with accompanying documents, and I move:

That the Senate take note of the report.

Throughout this inquiry, the committee heard directly from affected communities about the impacts of climate driven disasters on their lives and livelihoods and how the insurance industry is failing these communities.

I want to centre their voices.

We received submissions and heard harrowing testimony from around the country—from flood victims in the Northern Rivers in Melbourne to cyclone affected communities in Far North Queensland, farmers in South Australia and small businesses in Western Australia. Through their stories of loss, pain and persistence, it is clear that we are in the midst of a growing insurance affordability crisis, particularly in areas seeing more frequent and more intense climate-driven natural disasters. We heard from a pensioner in Mullumbimby, New South Wales, who has seen her premiums almost double since the February 2022 floods in the Northern Rivers. She told us that she finds it very difficult to come up with this money but is really scared not to have her house insured. We heard of people leaving the Northern Rivers region as they can no longer afford to insure their homes. Chels Hood Withey, the president of the Community Disaster Action Group, said:

… entire streets in towns remain empty, with residents unable to return due to inadequate insurance payouts or delays or ineligibility for government assistance. Community centres, schools, and local businesses—the backbone of the social fabric—are still struggling to rebuild.

One resident spoke of the extreme financial hardship caused by skyrocketing premiums that have now reached $25,000 a year for an insurance policy that has left their home underinsured. For many who continue to seek an insurance payout, the insurance experience has proven to be more traumatic than the disaster.

These experiences have obviously traumatised communities. It's bad enough that they are struck with the tragedy that comes with these climate-driven disasters, but to have that compounded by an insurance industry unwilling to assist these communities makes matters even worse. This account from Noelle Maxwell from the Northern Rivers is one example:

I'd like to speak to the PTSD that I now suffer as a result of my insurance experience, one that I didn't even know I had until last week when I received a letter in the post cancelling my policy because one of my auto payments didn't go through. I had corrected this and paid, but it didn't register so they cancelled my policy. That required me to phone them, something that I had stopped doing after the first year as I just couldn't stomach it.

When I made the call, I was unable to think clearly or to respond to the word prompts. I actually became physically ill listening to the hold music. I burst into tears when they answered the phone and I couldn't talk for a while.

There is something clearly very wrong with the way insurance companies deal with people, and also very wrong with the way insurance is priced if people are having to pay tens of thousands of dollars for premiums while the CEO from IAG, Australia's largest insurer, walked away with a 78 per cent increase to his statutory pay, and the Suncorp CEO who enjoyed a 61 per cent increase in his pay. That is why this report includes recommendations for greater transparency into how insurance premiums are priced, and expanded scope for the ACCC to monitor the insurance sector.

This insurance crisis requires a multifaceted approach which includes government responsibility and action, hence the recommendation of expanding the cyclone reinsurance pool to cover all natural disasters. This should also take account of lessons learned from the operationalisation of the current pool. Above all, it is clear that insurance has become another major stressor caused by the growing climate crisis, and it's the most vulnerable who are suffering the most and who will bear the brunt as the climate crisis worsens. It is renters who are disproportionately not insured. It's retirees and those who are socioeconomically disadvantaged who tend to live in the areas considered of high risk, as this is the only affordable housing they can find. That is why we all need to pay attention to this inquiry and to this report. It's the cascading impacts of the climate change crisis that requires a response from government and industry alike. A natural disaster isn't just a natural disaster; it's the climate crisis that is exacerbating an insurance crisis, that is then exacerbating the housing crisis. It's all interconnected. It's all interrelated.

The Actuaries Institute says 1.6 million households are experiencing insurance stress, which is up five per cent from two years ago. The Climate Risk Group warned that by 2030 more than three million homes—that's 21 per cent of all homes—will have exposure to some level of riverine flooding, and this will only get worse as the climate crises escalates.

The State of the climate 2024 report, co-developed by the CSIRO and the Bureau of Meteorology, warned that changes in the weather and climate are happening at an increasing pace. We are at a crucial juncture where we can either tackle this issue head-on or allow it to escalate and get worse. Temperatures have risen, and we will have to adapt to deal with more frequent and intense disasters. That's why the committee report includes recommendations for what the government can do today to help communities prepare and respond when disaster hits.

As the ANU Institute of Climate Energy and Disaster Solutions wrote to the committee:

Federal and State governments need to pursue rapid and concerted efforts to reduce GHG emissions in line with our commitments under the Paris Agreement to restrict global temperature increases.

…   …   …

Effective GHG emission reduction policies must be urgently implemented globally to change our course toward future temperature increase and its impact on rising insurance costs.

The insurance affordability crisis that is impacting communities across the country adds to the urgency for governments to act now on reducing emissions. That means ending new coal and gas and stopping pouring more fuel on the fire. That means taking every action to transition away from fossil fuels right now.

Why should families, renters and retirees bear the burden of the climate crisis? Why should they pay absurdly high insurance premiums for a climate crisis they didn't cause? The answer is simple: they shouldn't. The ones who should pay are the ones that caused the crisis and profit from it. That is why the committee report includes recommendations for a polluter-pays model. The report calls on the Treasury to develop options for a levy on coal and gas companies; the funds raised from that could be used for disaster mitigation, resilience measures and the cost of rising insurance. It's time to make fossil fuel companies pay for the damage they are causing.

Fortunately, we have a precedent to help guide our decision-making. The US state of Vermont recently introduced laws to make big fossil fuel companies pay for the damage from weather disasters fuelled by climate change. The law requires big oil companies and others with high emissions to pay for that damage based on the degree to which climate change contributes to extreme weather in Vermont. We need to do the same here, and we need to do it urgently to help communities suffering from the double burden of climate driven disasters and skyrocketing insurance premiums.

Finally, and importantly, I thank colleagues on this inquiry and the committee secretariat, especially Jane Thomson and Annika Khawaja in particular—and my team, without whom this work would not have been possible. I commend the report to the Senate and seek leave to continue my remarks.

Leave granted; debate adjourned.