The Australian Prudential Regulation Authority (APRA) has released its Insurance Climate Vulnerability Assessment (Insurance CVA), a prudential stress test showing how climate-driven pressures on insurance premiums could significantly widen the home insurance protection gap and weaken the resilience of Australia’s financial system.
APRA’s Insurance CVA examined how home insurance coverage may fall under two severe but plausible global climate-related scenarios projected out to 2050. One scenario involved higher physical risks from weather-related events, while the other involved greater economic impacts from transitioning to a lower emissions economy.
APRA estimates that around one in seven Australian houses are uninsured today. Under both stress scenarios this could rise to around one in four by 2050 – equivalent to an additional one million homes without adequate insurance.
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