It’s not news that climate change beings with it not only damage to the environment, but also some massive bills. In fact, in 2017, APRA Executive Member, Geoff Summerhayes, told the Insurance Council of Australia that, “Some climate risks are distinctly ‘financial’ in nature. Many of these risks are foreseeable, material and actionable now.”
But it’s not just on a macro scale that global warming is turning the heat on for Aussies. Individual households are also being hit in the hip pocket thanks to warming temperatures - and we don’t just mean the icecream budget blowing out.
Insurance is a risk-based product - generally speaking, the more risky it is to insure something or someone, the more expensive premiums are. When it comes to insuring our houses, being in a spot at risk for extreme weather is a big factor in our insurance bills.
The newly launched Australian Actuaries Climate Index has warned that “the frequency of extreme conditions this autumn was higher than historical extremes in autumns between 1981 and 2010,” according to the ABC.
"It's fair to say this is a pretty new area for everyone and you can imagine insurers in particular are concerned they have to charge adequate premiums for the risk that they're taking on," leading actuary and Finity Consulting principal Tim Andrew, who developed the Index, told the ABC's AM program.
That means that, as the risk of extreme weather increases and the amount of claims from these events goes up, it’s likely premiums will also gradually start to climb. Make sure you prepare for rising prices by starting off on the right foot with the best value home insurance around.
According to Mozo data, for homeowners in areas like Surfers Paradise, Homebush Bay, the Murray Darling Basin and even the Melbourne CBD, climate change might also mean dropping house prices.
When Mozo looked at factors like rising sea levels, temperature increases, storm, flood and
bushfire risks, these were all areas identified as most at risk from the effects of climate change in the next 30 years. And at risk properties are worth less, according to Mozo Property Expert Steve Jovcevski.
“The impacts of climate change will have a major domino effect on the Australian property market,” he said.
“Australians should be aware that a property’s value doesn’t change when an extreme weather event occurs but when the market determines it will occur, leaving the home owner vulnerable to a massive drop in value as the effects of climate change become more apparent.”
Bureau of Meteorology data shows that the temperature in Australia has been steadily trending higher since the 1980s, so you can certainly expect to be using your air conditioner more often as the years go by.
Via Bureau of Meteorology
Added to that that, Grattan Institute report recently revealed household energy bills increased by up to 20% over 2017, thanks to ‘gaming’ of the system by energy generators, closure of major power stations and the increased cost of inputs like gas and black coal.
High power prices and higher temperatures are a combination that could hit Aussies hard in the hip pocket. Switching to the best value electricity plan you can find might be a good start to combat the budget stress.