Zurich report warns of rising climate threats to Australian tourism
Zurich report warns of rising climate threats to Australian tourism | Insurance Business Australia
Catastrophe & Flood
Zurich report warns of rising climate threats to Australian tourism
Findings reveal most affected tourist spots
Catastrophe & Flood
By
Roxanne Libatique
Zurich Financial Services Australia and Mandala Partners have introduced the Climate Risk Index, providing a detailed assessment of how climate change is affecting Australia’s tourism sector.
The new report, released as extreme weather costs and related insurance claims continue to rise, evaluated the vulnerability of key tourism assets across the country.
Drawing on Zurich’s global climate risk analysis, the report assessed tourism sites such as national parks, airports, beaches, and museums, using future climate scenarios developed by the Intergovernmental Panel on Climate Change (IPCC).
By 2050, this number could increase to between 55% and 68%, depending on whether global temperatures rise by 2°C or 3°C. If the more extreme scenario unfolds, 80% of these sites could see heightened risks by 2050.
Climate-related disasters, such as the 2019-20 bushfires, could endanger up to 176,000 jobs, with a significant share of these in regional areas.
Australian states most exposed to climate risks
Queensland is identified as the state most exposed to climate risks, with 79% of its tourism locations in elevated risk categories.
Following closely behind are Western Australia and the Northern Territory, where 69% and 63% of sites, respectively, are in high-risk areas.
Australian tourism sites most exposed to climate risks
Airports are particularly vulnerable, with all of Australia’s 31 busiest airports falling into the highest climate risk categories due to exposure to wind and storm events.
Natural attractions, such as wine regions and national parks, are similarly at risk, while man-made sites like museums and sports venues are at comparatively lower risk levels.
Justin Delaney, CEO of Zurich Australia & New Zealand, emphasised the need for bolstering resilience.
“Australia’s tourism assets not only play a significant role in an increasingly diverse visitor economy but are collectively central to our national identity,” he said.
Adam Triggs, partner at Mandala Partners, pointed out the lack of data on climate preparedness.
“A key reason for Australia’s more limited focus on the physical impacts of climate change is a lack of data, and this is exactly the gap that our partnership with Zurich seeks to fill,” he said.
Rising insurance claims reflect growing climate risks
The introduction of the Climate Risk Index for tourism has occurred alongside increasing concerns over the economic costs of extreme weather events in Australia.
Australian insurers are now paying out an average of $4.5 billion annually for extreme weather claims, more than double the average of $2.1 billion paid out in the previous three decades. While total premiums collected by insurers have grown, from $50 billion in 2012 to $86 billion in 2023, rising claims costs have kept profitability largely flat.
In the 2023-24 period, insurance claims related to extreme weather amounted to $2.19 billion, consistent with the prior year, though the volume of claims surged to nearly 157,000 – an increase of 66,000 from the previous year.
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