AUSTRALIA'S exposure to natural risks is on the increase and governments at all levels should step up efforts to limit losses and prevent insurance costs spiralling higher, one of the country's biggest insurers says.
Modest investments in flood or fire mitigation measures can significantly reduce the cost of disasters when they occur, Suncorp says in its Risky Business report on risk management.
"More frequent extreme weather events, economic growth, urbanisation and population shifts towards high-risk areas have all combined to dramatically increase Australia's risk exposure," Suncorp says in the report.
"The chance that natural hazard will become natural disaster is greater than ever."
Much of Australia remains gripped in record heatwave conditions. The mercury climbed to an average maximum of 40.33 degrees on Monday, the Bureau of Meteorology said.
Insurers continue to tally the cost of the bushfires across south-eastern Australia.
The Insurance Council of Australia said some 420 claims for losses had been lodged for the fires in Tasmania, with insured losses estimated at $42 million so far.
Other states have so far avoided fire losses of the same scale even as conditions for fire remain extreme across large regions of the country.
"At this point, we've had no significant property losses [in NSW]," said ICA spokesman Campbell Fuller, adding the council was monitoring fire events closely.
The Suncorp report says governments can assist with fire-risk reduction through fuel-load management, prescribed burning and firebreaks.
Households, though, have perhaps a bigger role to play by installing fire defence systems and clearing vegetation close to homes.
Suncorp last year stirred public anger in parts of Queensland for deciding to "red-line" or halt sales of new insurance policies in the outback towns of Roma and Emerald because of repeated flooding events.
"Floods are a bit more predictable than a bushfire," said Chris Newlan, Suncorp's head of public policy and corporate affairs. "A bushfire can be started by a couple of 16-year-olds on school holidays," he said.
The issue of taking preventive measures to limit later disaster costs can best be seen in the case of Roma, which put off plans to build a $2 million levee seven years ago, said Mark Milliner, chief executive of personal insurance at Suncorp and the president of ICA.
"Broadly it's cost $500 million for the government and private sector over those seven years," Mr Milliner said.
While other insurers kept selling new insurance policies in Roma and Emerald, Suncorp wanted to send "a very clear message to governments that mitigation had to be a priority", Mr Newlan said.
"The risk isn't reduced until that infrastructure is physically there, as opposed to a press release going out," he said.