Climate change making insurance premium unaffordable: Australia’s QBE Insurance Group

On Monday, Australia’s QBE Insurance Group stated, climate change is likely to make a group of insurance premiums unaffordable for customers who are exposed to extreme weather events. As a result, there is “material risk” for its operations across the globe.

In 2019, QBE’s net Australia-Pacific cost of catastrophe claims jumped to $193 million, up from $106 million a year before; this was led by catastrophic bushfires across south east Australia and unprecedented floods in the country’s north east coast.

In a statement, QBE said, it has started to adjust its catastrophe models to factor in the expected impacts of climate change until 2100; it has also factored in weather-related exposures from emissions and temperatures in its models. In the short-term, it will manage higher claims by considering event frequency and severity in its capital planning; it also plans on deploying a comprehensive catastrophe reinsurance program.

In the long-term, it expects the physical impacts of climate change “will result in our customers seeking increased insurance for the protection of their assets and the services they provide.”

“This may cause insurance premiums to become unaffordable, especially for customers in areas more exposed to weather-related events, potentially resulting in a loss of revenue.”

Banks and insurers are also facing stricter regulatory scrutiny over their response to global warming, with shareholders demanding more transparency on climate-related risks and better disclosures.

In its annual climate disclosure, QBE stated, it plans on phasing out all direct insurance services for thermal coal customers by 2030. It is also committed to shun all direct insurance services for new thermal coal mines, thermal coal transport infrastructure and power stations.

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