New weather and climate insights report finds Australia to transition from La Niña to El Niño in winter 2023
SYDNEY, 15 June 2023 - Aon plc (NYSE: AON,) a leading global professional services firm, today released its 2023 Weather, Climate and Catastrophe Report: Asia Pacific Insights, which identifies natural disaster and climate trends in the region, with an outlook for weather trends in Australia for 2023.
The report shows Australia has recently come out of a rare triple-dip La Niña – three consecutive years of La Niña conditions - with the Bureau of Meteorology officially declaring its end in March 2023, and Australia now currently in El Niño Southern Oscillation (ENSO) neutral conditions.
After an extended period of pervasive La Niña and high catastrophe (CAT) losses, there is now a 70 per cent chance - more than twice the normal likelihood - that El Niño will begin to form this winter in Australia, peaking in spring and summer.
If El Niño arrives as expected in winter, Aon predicts there may be warmer-than-average temperatures, particularly across southern and eastern Australia, and an increased likelihood of high fire-danger weather days. El Niño is also associated with lower-than-average rainfall and therefore brings with it concerns about water availability and drought. Typically, 40 per cent of bushfire losses occur during periods of El Niño, which are hotter, drier and more settled conditions.
“The historical loss record shows us that bushfire losses are correlated to periods of El Niño, albeit to a lesser extent than floods and cyclones are to La Niña. El Niño years have typically led to lower total insured loss years in Australia than La Niña years, and while floods and cyclones do occur during El Niño, they are less likely. After three years of back-to-back La Niñas, the concern is fuel growth and the preconditioning of the landscape for bushfire. We also see wider economic issues associated with pervasive El Niño including water availability, crop yields, coral bleaching events, heatwaves and human health implications,” said Tom Mortlock, senior analyst at Aon and adjunct fellow at the Climate Change Research Centre at the University of New South Wales.
The report also shows 2022 was the third-highest insurance industry loss year on record since 1967. Flooding is now Australia’s second-most costly peril since 1967 – causing a total of AUD 23.53 billion of industry reported losses, now surpassing hailstorms (AUD 21.45 billion), but still behind cyclones (AUD 28.11 billion). This emphasises the importance of “secondary perils” to Australia’s natural hazard environment.
“What we have seen in the APAC region over the year is continued evidence of the substantial protection gap of 86 per cent - the difference between total economic losses and what’s covered by insurance - which has meant many disaster losses were uninsured. While the protection gap is not as great in Australia, the country continues to be exposed to increasingly volatile weather conditions that might in part be enhanced by the growing effects of climate change. It is clear that closing the protection gap anywhere demands an ‘all-hands-on-deck approach’, linking insurance with governments, public policy and other sources of risk-taking capital,” said Peter Cheesman, head of analytics at Aon.
Read the 2023 Weather, Climate and Catastrophe Report: Asia Pacific Insights here.
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