Insurance losses as a result of extreme weather are mounting but for the most part, this is not because the weather is getting worse.
Instead, claims costs are largely rising because of the increase in buildings exposed to damaging weather and in building costs.
Earlier this year, the Insurance Council of Australia (ICA) made a detailed submission to the Senate Standing Committees on Environment and Communication arguing for a host of reforms to reduce insurance losses caused by extreme weather events.
It called for changes to the Building Code of Australia so that buildings are constructed in line with regionally appropriate minimum standards for durability to extreme weather, citing “a long-term failure in Australia to construct the built environment with due regard to the likely local extreme weather hazards”.
“While the community cannot control extreme weather hazard, it can exert significant power to over its exposure and vulnerability through appropriate regulation and development practice,” the submission states.
As well as reducing development in hazard-prone areas, the report called for a new approach that actively requires the built environment to be constructed in a way that makes it resilient to extreme weather, to reduce damage and economic loss to the community.
Building better barriers
ICA Policy Risk and Disaster General Manager Karl Sullivan says the council is not in favour of a ban on construction in areas that are prone to natural disasters.
“What we want is for the construction of the built environment to be less ‘brittle’,” he says.
The problem, Sullivan says, is that existing building standards ensure a new building won’t fall down but they don’t protect a structure against severe weather events.
The ICA has developed a Building Resilience Ratings Tool, which scores buildings on their ability to withstand five weather hazards. The hope is the tool will be increasingly used during property transactions.
“We hope this will commoditise the value of resilience, so when you buy a property you’ll know more about it,” Sullivan says.
“Insurers will also be able to acknowledge and reward people who have gone beyond the building code.”
The CSIRO is also doing extensive work to reduce extreme weather risk to the built environment.
Although some of the CSIRO’s research involves things like the Pyrotron, a 25m wind tunnel allows scientists to observe the spread of fire under controlled conditions, many of the ways to reduce risk are much more low-tech.
Justin Leonard, the CSIRO Climate Adaptation Flagship’s team leader for Bushfire Urban Design, says his unit is trying to educate policyholders to be more aware of the specific risks around their properties and to take appropriate steps to protect themselves.
“We’re encouraging people to talk to their local fire agencies and develop a clear understanding of their specific risks and consider the low hanging fruit in terms of managing these risks,” Leonard says.
For instance, factors such as where people park their boats in proximity to their homes, the type and location of their fencing and even where they and their neighbours store garbage bins can make a difference when it comes to protecting a property from fire.
According to natural hazards research centre Risk Frontiers, 60% of the buildings destroyed in the 2009 Victorian bushfires were within 10m of bushland. At that distance, such a fire is expected to destroy 90% of buildings.
Brokers with clients in known risk areas such as cyclone and bushfire zones can share the research findings of the various bodies, as well as the work being done by the ICA, to help policyholders better understand, and therefore mitigate their risks.
Hopefully over time, building construction will also improve so that structures are better able to withstand extreme weather events, which will make premiums more affordable and also result in lower loss of life stemming from natural disasters.
Burning down the house
Billed as the most advanced facility of its kind in the world, the FM Global Research Centre in Rhode Island is where cutting-edge research into the effect of weather hazards on structures takes place.
Emma O’Rourke from InterRISK recently won a scholarship to experience the US research centre first-hand.
“The facility tests building materials to see how they react to different hazards,” she says.
“The fire lab is the size of a football field with a 30-foot moveable ceiling to test various sprinkler heights. You can recreate a client’s warehouse within it, and test how their stock and existing sprinkler system would react to a fire.”
While she was there she watched a research team set off 12 reels of paper, three stacks high.
“Within a minute it was ablaze. We could feel the heat even behind safety glass. And within minutes sprinklers had it under control,” she says.
It showed businesses with proper sprinkler systems that experience a fire would not have a major disruption to their operations.
In another test O’Rourke witnessed an experiment designed to test the strength of plywood window protection of different thickness against flying debris during a cyclone.
“Using one inch thick plywood rather than just half an inch thick means the glass is more likely to survive,” she says.
O’Rourke also observed experiments involving hailstones the size of baseballs shot at materials such as tiles and timber shingles.
‘The whole experience was amazing, from witnessing dust explosions to recreating earthquakes. It really showed the importance of sprinklers and how simple prevention techniques can prevent a major loss to a business.”
The key lesson is that many hazards can be greatly reduced if property owners use superior building material and practices, and build to last, not just to code.
To see a video of the FM Global Research Centre in action, visit insuranceandrisk.com.au
New structures better able to withstand cyclonic conditions
The mining boom has delivered a positive development for cyclone-proof structures. Queensland’s innovative residential developers Pearls MiiHome have just sent the first of 13 new cyclone-proof buildings to a Rio Tinto mining camp in Marandoo in Western Australia.
The buildings are housed in shipping containers and fold out – like a child’s Transformer toy – to be a complete and totally mobile home.
They are completely cyclone-proof and remotely fold in and out to protect the entire structure from a wind event.