Cairns Regional Council has no control over how insurance providers calculate insurance prices. There are many factors that an insurance provider may take into account when determining insurance costs, not just the occurrence of extreme events that damage property or development restrictions placed on areas identified as subject to coastal risks.
Insurance is an annual contract informed by a number of factors, including past events and the likelihood of events occurring in the term of the policy period.
Based on similar coastal studies undertaken in Western Australia, Council does not envisage that property insurance will increase based on the findings of the Our Cairns Coast project.
Property valuation is a subjective, rather than an objective, science influenced by a range of factors. The occurrence of extreme events that damage property and development restrictions placed on areas identified as subject to coastal risks are not the only factors that will influence a property’s value. Other influential factors include external elements such as location and amenity, as well as specific details such as supply and demand. Market conditions can alter at any given time.
Whilst climate change may have an effect on property values, a comprehensive study (PDF) conducted in 2008 of the impact of identified coastal hazard zones and development restrictions on properties in Hawke’s Bay (NZ) concluded that wider property market and economic factors have outweighed any stigma that may be apparent with the initial announcement of Coastal Hazard Zones. According to the study, markets have continued to operate consistently in line with general market trends and there does not appear to have been any adverse effects to property value that can be identified as caused by the introduction of Coastal Hazard Zones.
It is important to remember, much of the data that will be captured in this study is not new and is already publicly available to insurers, financiers and investors.
Recognising, addressing and adapting to coastal hazard risks are key to avoiding real damages to property and property values.