Tens of thousands of properties along the coast of New South Wales could be left uninsured to the threats of rising sea levels, Gabby Greyem reports.

Sea level rise could cost Australians $150 billion in uninsured real estate, according to Insurance Australia Group.

As a result of global warming sea levels are predicted to rise up to 40 cm by 2050 and 90 cm by 2100. 46,000 properties between Newcastle and Wollongong are less than three metres above sea level and are uninsured for coastal erosion or landslip.

Director of Lonergan Edwards & Associates, Tony Coleman, said most insurance policies cover the house and contents, but not the land value, and often the land is a significant part of a waterfront property’s overall value.

“Even half a metre within 50 years is a lot of extra sea to keep out if you’re trying to stop waves.

“A lot of people are going to lose their property and they won’t be insured,” he said.

Mr Coleman believes there is a growing realisation about the costs of sea level rise, but it is being overshadowed by the high focus on the Carbon Pollution Reduction Scheme.

“The whole coastal property issue … seems to be a case of let the disaster happen and then we’ll have a huge fight about who’s going to pay for it,” he said.

The House of Representatives Standing Committee on Climate Change, Water, Environment and the Arts tabled a report to Parliament on Monday night, following an eighteen month inquiry into climate change and environmental impacts on coastal communities.

The report, entitled Managing our Coastal Zone in a changing Climate: the Time to Act is Now, makes recommendations to improve the governance of Australian coastal zones which will be impacted by climate change.

The inquiry received 106 written submissions from organisations including Insurance Australia Group, the Australian Local Government Association, the Department of Climate Change and the Planning Institute of Australia. The inquiry also conducted 28 public hearings around the country between August 2008 and August 2009.

Committee Chair, Jennie George MP said “it’s one thing to read about the science but another to see first hand, as we did, the obvious consequences of climate change on our coastal zone.”

IAG has proposed establishing a coastal land value insurance fund, which would work in a similar way to life insurance, covering the land value of properties affected by sea level rise. Coleman said such a fund will require heavy government support because insurance companies could not do it alone.

In June this year, General Manager, Policy, Risk and Disaster Planning for the Insurance Council of Australia, Karl Sullivan, told the inquiry up to 896,000 Australian coastal properties are exposed to sea level rise and banks may start to refuse loans for them.

“If the person cannot get insurance for the risk that the lender requires then the lending will probably not occur.”

When asked by Mark Dreyfus, MP if banks will base their lending criteria on whether an insurer will insure coastal properties, Sullivan declined to comment, saying that he could not speak for the banking industry.

Last year GIO became the first general insurance company in Australia to offer flood cover as a standard on all personal and home and contents insurance policies. The policy is based on extensive mapping and research that allows GIO to assess where the most at risk properties are located. Policies are priced on an individual level according to the perceived level of risk they face from flood.

“We wouldn’t refuse cover to anyone, but we would actually cover at the correct premium for the risk of flood for that property,” said GIO Communications Adviser, Rebecca Aley.

However sea level rise is not currently covered under GIO flood cover.

“Actions of the sea… like high tides, king tides and rising sea levels are actually things we don’t cover at this stage.”

Ms Aly said GIO is looking at developing products for climate change in the future.

Coleman said a major weather event caused by climate change may lead insurers to refuse to cover the cost of the damage because the cost is too high and this in turn would make banks nervous to lend to properties exposed to such risk. This he said will cause properties to lose value very rapidly.