This statement highlights key public policy positions of the Institute relating to climate change.

The Institute is highly supportive of inclusion of ‘Climate change adaptation and resilience’ as one of the six headline ambitions for the taxonomy. We support its inclusion as a DNSH criteria, through consideration of a physical climate risk assessment using at least two relevant scenarios. We are concerned there is no clear timetable for when adaptation and resilience will be considered and believe delaying creates significant risks for insurance affordability, the required investment and action on adaptation and resilience, and the overall costs of the net zero transition.

Climate risk is one the greatest challenges and opportunities for all countries. While some of the risks of overall increased adverse weather conditions and events have begun to be realised, there is significant uncertainty over future decades. Because insurance is a critical part of resilience, it is a critical enabler for economies to function well. This submission provides a response to all the Terms of Reference of the Inquiry.

The Institute supports the inclusion of ‘Climate change adaptation and resilience’ as one of the six headline ambitions for the Australian sustainable finance taxonomy. To support a broader focus of the taxonomy beyond climate change mitigation, the Institute strongly recommends that AFSI includes climate resilience and adaptation measures into the technical screening criteria for ‘construction and the built environment’.

The Institute encourages a bold and ambitious vision for the Plan. We encourage greater consideration of the uncertainty of the impact of climate change and the resources available to assess, manage and adapt to it than is indicated in the consultation paper. We suggest an additional objective of the NAP should include driving the substantial uplift in public sector investment required, as well as public and private sector partnerships. We emphasise the importance of strengthening and future-proofing building codes and land use planning rules.

The Institute strongly supports the work of the AASB in drafting the ASRS Standards, and supports the initially narrowed focus to climate risk and intended expansion to broader sustainability at a later time and phased implementation across reporting entities. There are, however, a few areas of concern, including: international consistency with IFRS S1 and IFRS S2; treatment of superannuation entities; supporting comparability of entities’ climate resilience; and support for implementation and education.

The Institute welcomes the opportunity to provide feedback on this consultation paper issued in November 2023. The Strategy will be a critical foundation to supporting the Government's objective in meeting its emissions reduction target, which will require significant amount of private and public investment for an orderly and positive economic transition.

This response to the ‘Exposure Draft Legislation – cyclones and related flood damage reinsurance pool’ draws on the Institute’s 18 June 2021 submission to the initial consultation. However, additional comments are provided in this submission, including: 1) technical clarification of the Event Definition – the Institute suggests the definition should look to past events to understand how the pool definitions will apply in practice and resolve issues related to claims which may fall outside the draft pool definitions; 2) Transparency and disclosure of data and the pricing framework – the Institute generally supports Treasury’s pricing schedule for the cyclone and related flood damage reinsurance pool to improve transparency and confidence; and 3) other risk control measures – we refer to the Institute’s Property Insurance Affordability Paper from November 2020 for additional policy measures to address risk reduction.

The Actuaries Institute understands Geoscience Australia is seeking to establish the factors that affect vulnerability of communities to severe wind events. One of the lenses into understanding that vulnerability is insurance uptake and affordability among the communities. At the request of Geoscience Australia, the Institute has analysed the following six local government areas (LGAs): Noosa Shire, Sunshine Coast, Moreton Bay, Redland City, Brisbane City and the City of Gold Coast.

This submission provides specific comments about pool coverage, reinsurance product design and links to risk reduction. It also provides general comments on the Institute’s work to date on insurance in the context of natural disasters, affordability pressures and potential solutions.

The Actuaries Institute commends Counsel Assisting for its considered and extensive Interim Observations and Draft Propositions on this issue of growing national importance. The Institute supports many of the draft propositions and has separately submitted a completed Draft Propositions Response Table in the requested electronic format.

Witness Statement by Sharanjit Paddam, Convenor of the Actuaries Institute Climate Change Working Group, to the Royal Commission.

The Institute notes that immediate emergency response is critical in the preservation of life and an important part of disaster arrangements, but we have confined our comments in this submission to issues regarding mitigation and adaptation, insurance and long-term financial recovery for communities. This submission synthesises the findings from the Institute’s body of work under four main areas: natural disasters in Australia, the changing climate, affordability of insurance and health impacts.

In its latest Dialogue paper, authors Dr Ramona Meyricke, Senior Actuary at TAL, and Rafal Chomik, Senior Research Fellow at the Centre of Excellence in Population Ageing Research, discuss wide-ranging implications of climate change on mortality, superannuation contributions and retirement incomes.

This dialogue paper outlines heat-related risks and explains why they should be considered by life insurers and annuity providers, individuals and government.

A New Climate Strategy Beyond 2012: Lessons from Monetary History. A Joint Lowy Institute and ANU Perspective