Kathmandu. Australian insurers are expected to face up to $29 billion in risk from the drought. This is the estimate of digital agriculture services (DAS), an agricultural fintech and geospatial data company. <\/p>\n
DAS warned in an October report that a single season of sudden drought in Australia between 2026 and 2027 could cause up to $12 billion in economic losses. However, a multi-year drought could cause up to $29 billion in damages. <\/p>\n
According to the DAS, a sudden drought reduces soil moisture within a few weeks to a few months. “This is due to intense heat and low humidity, lack of rainfall,” the DAS said, adding that it is different from a normal drought, which develops slowly over several seasons or years. \u2019<\/p>\n
According to DAS, insurance companies face three risks associated with drought: visibility (where drought is today), accumulation (where drought is increasing in portfolios) and projections (how this will change between 2030 and 2050). <\/p>\n
“The claim may not be directly related to the drought, but a drought sets the stage for the claim. This is a risk in itself and multiplies the risks that follow,” said Sarah Gorman, co-founder of DAS. <\/p>\n
In Australia, for example, severe droughts are often followed by forest fires. This can cost insurance companies billions in losses. The DAS notes that the Black Summer fires are an example of this. Insurance companies lost $1.87 billion in the damage caused by the largest wildfires in Australia’s insurance history. <\/p>\n
According to the DAS, insurance companies should evaluate droughts with floods, fires, wildfires, hurricanes and cyclones. “When insurers are unable to distinguish between high-risk assets and safer neighboring properties, they typically change prices for entire postcodes or withdraw from the sector altogether,” the report said. That can be abandoned by their competitors. For insurance companies operating in rural areas, drought is no longer just an agricultural issue. It has become a portfolio risk. \u2014Agency<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. Australian insurers are expected to face up to $29 billion in risk from the drought. This is the estimate of digital agriculture services (DAS), an agricultural fintech and geospatial data company. DAS warned in an October report that a single season of sudden drought in Australia between 2026 and 2027 could cause up to […]<\/p>\n","protected":false},"author":16,"featured_media":287751,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45044,45159],"tags":[],"class_list":["post-318682","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-international-news-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/318682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=318682"}],"version-history":[{"count":1,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/318682\/revisions"}],"predecessor-version":[{"id":318683,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/318682\/revisions\/318683"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/287751"}],"wp:attachment":[{"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=318682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=318682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=318682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}