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After thousands of homes along the banks of rivers, a massive clean-up effort has been launched in northern New South Wales and Queensland. submerged in Australia’s latest flooding crisis.
The sense of deja vu is obvious – more than 10,000 volunteers helping their neighbours pick up the pieces are going by ‘Mud Army 2.0’, referencing the heroic clean-up efforts after Brisbane’s 2011 floods.
This second call to action is a heartwarming yet ominous moniker; because as any climate expert will tell you, this won’t be the last time the mud army is called into service.
As the climate crisis makes natural disasters more frequent and severe, once sought-after homes from the banks of NSW’s northern rivers region to the Gold Coast in Queensland are facing some thorny challenges.
The flood clean-up is only the beginning.
Experts predict that the latest disaster will further fuel rising insurance premiums, and make it harder to obtain mortgages in areas most susceptible to climate change.
This could mean that properties once dreamed up by Australian families could fall in value as a result of their increased vulnerability to flooding.
The insurance bill for the latest flooding alone is staggering.
According to the Insurance Council of Australia, more than 70,000 insurance claims have been filed. Early estimates suggest that at least $1 billion has been spent.
It will increase the estimated $4 billion in insured flooding losses in Australia over the last decade and more than $20B annually in economic damages from natural catastrophes.
By 2050, this annual cost will reach $39 billion. The climate crisis renders meaningless historicalisms about one per 1000-year floods or bushfires.
‘Uninsurable’: Bleak outlook for riverside homes
Karl Mallon is the chief executive of Climate Valuation, a risk assessment firm. He is currently working with Westpac and other major banks to understand the implications of these costs for areas like Ballina and Lismore.
His modelling has identified at least 700,000 homes across Australia vulnerable to climate risks as the world heats, a pressing issue he says will leave many areas “uninsurable”.
“The rule of thumb has always been that properties in a one-in-a-100-year flood zone with a 30-year mortgage probably won’t suffer a flood event,” Dr Mallon told The New Daily.
“But now these areas are flooding two or three times over a decade.”
It’s impossible to say how frequent and severe extreme weather events will become, but scientists say the trend is clear and the financial industry is obliged to heed their warnings.
“Lismore and Ballina are going to get a jolt in insurance premiums. A lot of people already didn’t have cover because they couldn’t afford it,” Dr Mallon said.
Higher insurance premiums are only the tip of an iceberg.
Nicki Hutley, Climate Council economist said that the climate crisis is likely to trigger a cascading devaluation of many once-premium properties along riversides as higher insurance prices filter through to mortgages.
“These so-called one-in-a-1000-year events, according to the latest IPCC report, are likely to become one-in-20-year events,” Ms Hutley said.
“Who wants to insure that, and how are you going to get a mortgage?
“These places are at risk of not being insurable in the not-too-distant future, and some property values could essentially fall to zero.”
Australia has seen this play out in Far North Queensland, Ms Hutley explained.
“We’ve seen insurance premiums for cyclone-prone areas go through the roof … some resorts in Queensland have never been able to reopen. The properties became unsellable,” she said.
Climate mitigation is a responsibility of communities
Ms Hutley stated that the only way to stop a downward spiral in rising insurance premiums, and falling property values, is to accelerate government efforts to improve climate resilience.
Ms. Hutley conducted research in 2014 following the Brisbane floods. She found that flood levees yield five times their investment for mitigation of damages.
“Bridget McKenzie came out the other day and said the disaster resilience fund is for the future,” Ms Hutley said.
“How ludicrous is that? This disaster is now.”
The Insurance Council of Australia has also supported additional funding to mitigate natural disasters. $2 billion plan for increased efforts, just last week.
Andrew Gissing is the general manager of resilience at Risk Frontiers. He was a former senior manager at SES who responded to the 2011 floods. He said that the best thing governments could do to improve climate resilience was to invest more money into infrastructure, such as flood levees.
“The key message is about mitigation. The more we invest in mitigation the more we reduce risk that reduces insurance premiums,” he said.
Mr Gissing stated that insurance premiums for houses in the affected areas dropped 50% after the Queensland government had invested in levees following the 2011 floods.
“Funding is of utmost importance,” he said.
“It’s a matter of money, and the community also has a part to play in becoming as resilient as possible.”
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