As Australia faces the prospect of another dangerous bushfire season, the Chief Technical Officer at Allianz Australia, James Fitzpatrick, has called for increased investment in resilience and risk awareness, and said climate solutions hold the key to combating rising home insurance costs.
Speaking exclusively to The Business Of, a podcast from UNSW Business School, Mr Fitzpatrick said the pace of climate change is faster than the insurance industry had predicted, and warned extreme weather events such as fires, floods, and severe storms are “dramatically increasing”.
“The problems are getting worse. They’re going to cost us more than the solutions are going to cost. The quicker we act, the better we mitigate it, and the better off we’ll all be in the future,” he told The Business Of.
Mr Fitzpatrick told host Dr Juliet Bourke, a Professor of Practice in the School of Management and Governance at UNSW Business School, that it's also important to embrace innovations in the design and construction process of building new homes – particularly those in high-risk areas.
“We’re working with a paint compay that has a product that effectively fireproofs a home. Post-bushfire, instead of having significant losses it’s just a clean and a wash-off, and the house should be resilient to that,” he said.
Mr Fitzpatrick says the work already being done gives him optimism that Australia can be more resilient in a climate-challenged future.
“We are ahead of many other parts of the world. We’re seeing government interest in investing in resilience and trying to do that in a way that’s informed by what is the biggest risk and what is the biggest impact,” he said.
“We’ve got a lot already in terms of knowledge, but I think as we try these investments, as we try to do different things, and some of the relocations post the [Lismore] flooding are a good example, there will be lessons that we can share around the world.”
Mr Fitzpatrick added that insurers learn from each extreme weather event, and in some cases that leads to a reduction in premiums.
“We recalibrate, we learn from experience, that leads us to better risk assessment which ultimately works into pricing, some up, some down,” he told The Business Of, using the example of how a flood can change the course of a river, reducing the risk to homes previously in a high impact zone.
Mr Fitzpatrick said governments, businesses and homeowners need to consider future scenarios and build resilience into long-term assets like infrastructure and housing.
“It is very likely parts of the country [will be] classified as uninhabitable. We need to be planning for that today, and we’ve got a long way to go before we are doing that well.”
His comments were made on the new series of The Business Of, a podcast from AGSM @ UNSW Business School exploring the role businesses and industry leaders play in the fight against climate change.
The Business Of host Dr Juliet Bourke, a leading consultant and academic at UNSW Business School, added: “As we head into another long Australian summer, James’ comments feel prescient as insurers wait to see if their risk modelling holds up through another season of extremes. His optimism that we can still insure for the future despite increasing unpredictability is a lesson in remaining hopeful and resilient in trying times.”
To hear this episode of The Business Of, visit: https://pod.fo/e/202444
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