Cost of natural disasters

IBISWorld forecasts the cost of natural disasters to skyrocket by 350.0% in 2025, to $3.60 billion. This large spike reflects an anticipated reversion to long-term trends in 2025 after the costs of natural disasters in 2024 were relatively low. Forecasts by the Bureau of Meteorology, as of December 2024, predict that neutral weather patterns are likely to be prevalent across the early months of 2025, with any La Nina event likely to be extremely short-lived. However, should a La Nina event occur, flood risks across Australia's east coast would become elevated, placing upwards pressure on the costs of natural disasters.

Losses caused by natural disasters exhibit a very high degree of volatility, with the degree of damage caused by each isolated event varying. The costliest natural disaster (in terms of insured losses) over the past five years was the SE Queensland and New South Wales floods that occurred in February 2022. The costs of these floods were estimated to be in excess of $6.3 billion, causing a spike in total costs of natural disasters in 2022. Aside from the SE Queensland and New South Wales floods, other disasters resulting in significant costs include the Mansfield Earthquake in Victoria in 2021 and severe storms across the Eastern Seaboard in over the Christmas period of 2023. Disasters occurring within built-up urban areas have also inflicted a disproportionately high number of insured losses, with many hailstorms over the past five years incurring significant losses despite a relative lack of fatal threats to the population when compared with bushfires, cyclones and floods.

According to the Department of Home Affairs, disasters have fallen from 69 across 2023 to 38 through the first 11 months of 2024. This has led to a sharp decline in the costs of natural disasters in 2024. Specifically, bushfires have been scarce in 2024, with 4 major bushfires recorded between January and November 2024, compared to 35 fires through the same period in 2023. However, bushfire threat will remain high throughout December, threatening to push up costs for the year should any disasters occur. Overall, IBISWorld forecasts the cost of natural disasters to drop at a compound annual rate of 6.2% over the five years through 2025.