Climate Change Research Idea Gets Picked Up in NSW

We wrote about the 2013 NCCARF and Griffith University research about strata title building challenges with climate change, resilience and adaptation in the Article Climate Change, Strata & Adaptation Strategies.

As climate change becomes more mainstream and the resulting extreme weather is affecting more and more strata buildings, that research is being studied and used to inform strategies to deal with those challenges; especially as it affects insurance coverage risks, availability and premiums.

For instance, in the recently released NSW Government’s State Disaster Mitigation Plan 2024 – 2026 covering the Government’s statewide framework for disaster risk reduction and management one of the strata climate change research recommendations has been picked up.

That was the recommendation about establishing parametric insurance as an option that could be put in place where traditional insurance may not be available, like in high risk weather zones like northern Australia to deal with the exposure to climate change and the reduction in insurance availability.

Parametric insurance describes a type of insurance contract that covers a policy holder against the occurrence of a specific event or specific ‘disaster parameter’ by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses in a traditional policy. This means that the losses do not need to be assessed, which could mean that claims are faster and easier and put to what is most needed. It also means that the insured knows what it will receive and, more importantly, the insurer’s exposure is limited.

This is different to traditional insurance because it does not seek to cover the total cost of the actual loss. The parametric cover would only be available when a certain event parametric is met or exceeded, which could be a certain size or magnitude event e.g. if a magnitude 6 earthquake occurs.

So, I wonder where the 2013 NCCARF and Griffith University Climate Change, Strata & Adaptation Strategies research will pop up next?

You can read the full State Disaster Mitigation Plan 2024 – 2026 report here and you’ll find the section on parametric insurance at page 146.