Editing IPCC:AR6/WGII/Chapter-11 (section)

==== 11.3.8.1 Observed Impacts ====

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The finance sector has significant exposure to climate variability and extreme events ( ''high confidence'' ).

Aggregated insured losses from weather-related hazard events from 2013 to 2020 were almost AUD$15 billion for Australia (1.2% of GDP) and almost NZD$1 billion for New Zealand (0.4% of GDP) (NIWA, 2020; [[#ICA--2021|ICA, 2021]] ) ( [[#ICA--2020a|ICA, 2020a]] ; NIWA, 2020). However, there is no trend in normalised losses because the rising insurance costs are being driven by more people living in vulnerable locations with more to lose ( [[#McAneney--2019|McAneney et al., 2019]] ). In New Zealand, two major hailstorms during 2014–2020 and three major floods during 2019–2021 caused significant insurance losses ( [[#ICNZ--2021|ICNZ, 2021]] ). Insured losses exceeded NZD$472 million for the 12 costliest floods from 2007 to 2017, of which NZD$140 million could be attributed to anthropogenic climate change ( [[#Frame--2020|Frame et al., 2020]] ). In Australia, insured damage was almost AUD$1.0 billion for the Queensland hailstorm in 2020, AUD$1.7 billion for east coast flooding in 2020, AUD$2.3 billion for the 2019–2020 fires, AUD$2.3 billion for the Queensland hailstorm in 2019, AUD$1.2 billion for the North Queensland floods in 2019, AUD$1.4 billion for the NSW hailstorm in 2018, AUD$1.8 billion for Cyclone Debbie in 2017 and AUD$1.5 billion for the Brisbane hailstorm in 2014 ( [[#ICA--2020b|ICA, 2020b]] ). The insured loss from the seven costliest hailstorms in Australia from 2014 to 2021 totalled AUD$7.6 billion ( [[#ICA--2021|ICA, 2021]] ).

Some homes in the highest-risk areas tend to be in lower socioeconomic groups that may not buy insurance ( [[#Actuaries%20Institute--2020|Actuaries Institute, 2020]] ). For example, a quarter of residents that experienced loss or damage in the 2019 Townsville floods did not have insurance ( [[#ACCC--2020|ACCC, 2020]] ). Underinsurance reduces people’s capacity to recover from adverse events, while over-reliance on private insurance undermines collective disaster recovery efforts ( [[#Lucas--2020|Lucas and Booth, 2020]] ). In Australia, those in high-risk areas minimise house and contents insurance for financial reasons ( [[#Booth--2016|Booth and Harwood, 2016]] ; [[#Osbaldison--2019|Osbaldison et al., 2019]] ; [[#Actuaries%20Institute--2020|Actuaries Institute, 2020]] ). Insurance premiums in northern Australia are almost double those in the rest of Australia, and rising, mainly due to cyclone damage ( [[#ACCC--2020|ACCC, 2020]] ).

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