2/5. Applying adaptation to some sobering facts; building evidence that creates the conditions for change
Sharanjit Padam, Principal, Climate & ESG Risk, Finity Group
Finity recently authored a green paper called Home insurance affordability and socioeconomic equity in a changing climate. It’s a detailed investigation into the current state of home insurance affordability in Australia and the potential implications of climate change.
Sharanjit took us through some of the evidence that backs up what many already assume, but what this recent report does is provide the rationale needed for new thinking around adaptation for vulnerable people and communities.
The report aims to answer questions about the role that insurance plays in adaptation and resilience. How effective is it right now? How much do we rely on it, and how much does climate change affect these issues over time?
The most wicked problem that could be demonstrated through the data is that the riskiest geographies are inhabited by our most vulnerable residents with the lowest incomes. Our most vulnerable people are in the most vulnerable housing.
“It’s a classic example of why natural disasters aren’t entirely natural, through the choices we make and the way we organise the system, we create additional disasters”
90% of the population are paying ~1.4 weeks of annual income for their home insurance which is deemed affordable.
10% of the population is paying ~7 weeks of their annual income on house insurance. That equates to insurance being out of reach for one million homes.
It’s no surprise that the 10% is mostly made up of elderly, single parents, renters, low insurance literacy, and people with low savings.
We talk about global climate equity and challenges in developing nations but here in Australia, it’s clear that we’ll experience similar scenarios at a local level if adaptation isn’t applied soon.
Policy solutions need to be targeted at vulnerable communities and in an appropriate way. An example of policy gone wrong is from QLD where the government offered a co-payment for cyclone-proofing your home but as it required 25% contribution, it missed many of our most vulnerable.