The Need for a Multi-Level Approach to Climate Change—An Australian Insurance Perspective

Insurance is all about risk management and risk mitigation. A significant component of this risk equation is an ability to manage the variability of weather events. Climate modelling has shown that it only takes small changes in the mean climate to generate large changes in extreme weather. This has profound implications for the insurance industry, because a less-predictable climate impacts the industry's capacity to accurately calculate and price products. The insurance industry's response to climate change will determine the shape of the industry for decades to come. However, insurance companies acting alone, or even collectively, will have only limited impact in achieving success over the long term. This paper outlines a multi-level approach required by the insurance industry to make a real and lasting difference, including engaging governments; assisting and educating communities to be more aware and resilient; incentivising customers through advocacy, product innovation and appropriate product offerings; and leading by example and providing employees with the education and tools to facilitate action both at work and at home.