Media Releases

STATEMENT: Populist thought bubbles won't reduce insurance costs or tackle climate risk

18 February 2025

Peter Dutton’s threat to break up the country’s insurers is a populist thought bubble so deeply anti-free market that it is hard to reconcile it is a policy coming from the Liberal party. Why are they pushing populist rhetoric masquerading as a credible solution?

However Peter Dutton and I do agree on one thing – that is astronomically high insurance costs are a threat to families, and a threat to our economy.

Extreme weather events driven by climate change are escalating in frequency and severity, already costing us more than $38 billion a year. By 2060 the annual cost is projected to almost double to $73 billion. 

Meanwhile, recent economic modelling predicts a 14% annual hit to Australia’s GDP by 2050 driven by disaster damage, labour force impacts, and reduced land productivity from climate change, if action isn’t taken. These are not hypothetical risks; the climate crisis is already impacting household budgets, destabilising businesses and supply chains, and threatening our living standards and way of life. 

Insurance costs are soaring. Premiums have risen by more than 30% since 2022 – and 11% in the past year alone, pushing millions of Australians to be underinsured or uninsured. Climate Valuation analysis estimates that one in 20 Australian homes are already ‘uninsurable’, with this expected to rise to one in 10 by 2035.

For many, this means personal and financial ruin in the wake of a disaster. For the economy, it is an economic disaster in the making – as the devastating wildfires in Los Angeles have shown. Total economic losses from the LA Fires are now estimated at more than USD$250 billion, making it one of the costliest natural disasters in history.
 
Climate risk is one of the biggest threats to Australia’s economy. Yet Peter Dutton refuses to acknowledge it and has no plan to address it. He seems to think that if he doesn’t mention climate change, somehow it will go away. It won’t. Breaking up insurers will not make insurance more affordable. Unless we address the massive, underlying factor of climate risk - its associated costs are only going to escalate.

If Peter Dutton was really concerned about tackling insurance costs, the first thing he would do is present a credible climate and energy policy – something he has failed so far to do. Communities are already experiencing escalating climate fueled disasters, and so we must invest in building community and economic resilience as an urgent priority.

We can’t insure our way out of the climate crisis, but we can make our communities and our economy more resilient and put downward pressure on climate disaster related costs. To do so, we need to embrace ‘the resilience dividend’.

According to the CSIRO, every $1 spent on resilience saves up to $11 in recovery costs. By investing in risk reduction, preparedness and resilience, we can shield our economy and communities from the worsening impacts of climate change while unlocking significant benefits. It reduces disaster spending, helps lower insurance costs, protects property values, and helps keep the economy stable and productive. It's the smart thing to do and the only fiscally responsible choice.