With flood waters rising, there are warnings of a "climate-induced credit crunch" as natural disasters threaten the viability of home insurance.
"Entire regions are becoming uninsurable," Allianz Global board member Günther Thallinger warned in an article on LinkedIn last month. "This is not a one-off market adjustment. This is a systemic risk that threatens the very foundation of the financial sector. A house that cannot be insured cannot be mortgaged. No bank will issue loans for uninsurable property. Credit markets freeze. This is a climate-induced credit crunch."
Climate Valuation CEO Karl Mallon warns some Australian neighbourhoods could become what he calls "climate ghettos". "There are certain areas where you will start to see a negative spiral. We don't use the concept of climate ghetto lightly. It's a very serious warning."
Recent analysis from the Insurance Council of Australia (ICA) has found only 23 per cent of homes in the highest-flood-risk locations across the country have insurance.