--- title: "APN Research Brief: IAG 2025 Climate Report: $22.5B Weather Bill & Rising Hail Risk for East Coast Cities" url: https://australianproperty.network/apn-research/apn-research-brief-iag-2025-climate-report-22-5b-weather-bill-rising-hail-risk-for-east-coast-cities/ date: 2025-11-15 modified: 2026-01-16 lang: en author: "APN Academy" description: "Analysis of IAG's 2025 climate report confirms a $22.5 billion surge in extreme weather costs and pinpoints a rapidly growing hail risk for the Brisbane-Sydney-Melbourne corridor, signalling major headwinds for property development and insurance affordability." word_count: 1008 --- # APN Research Brief: IAG 2025 Climate Report: $22.5B Weather Bill & Rising Hail Risk for East Coast Cities ### Analysis: IAG's 2025 'Severe Weather in a Changing Climate' Report A deep analysis of Insurance Australia Group's (IAG) landmark 2025 climate report, *Severe Weather in a Changing Climate*, verifies a dramatic escalation in extreme weather costs and pinpoints a rapidly concentrating risk of 'large-to-giant' hailstones along Australia's densely populated east coast. The findings signal significant future headwinds for the property development sector and confirm the growing pressure on insurance affordability, which IAG's own corporate filings identify as a material risk that could trigger 'government intervention' in the insurance market. #### The $22.5 Billion Reality of Extreme Weather The report suite's media release highlights a staggering financial toll from climate-driven events. However, a critical verification is that these top-line figures are not IAG's proprietary research but are cited from the Insurance Council of Australia (ICA) to provide industry-wide context. - **Total Insured Costs:** $22.5 billion for extreme weather events over the five-year period from 2020-2025.- **Cost Increase:** This represents a 67 per cent jump compared to the previous five-year period (2015-2019).This data, sourced from the *ICA 2025 Industry Snapshot*, is strategically used by IAG to frame the urgency of its own granular scientific findings. The figures are notably absent from IAG's core scientific report, indicating a deliberate communications strategy to separate macro-economic context from its own peril-specific research. #### Hail Risk Intensifies Along East Coast Corridor The report provides high-value, specific data confirming that hail risk is a primary and accelerating threat, particularly for Australia's major population centres. This is a key input for climate-risk asset devaluation models. The primary finding states: **"Large-to-giant hailstone risks are increasing at the fastest pace over the most populated regions, notably the Brisbane-Sydney-Melbourne corridor of Australia..."** ##### Granular Data on Hail Threat - **Loss Driver:** The report quantifies that storms with hail sizes of at least 6 cm are responsible for over 80% of insured hail-related losses in the Greater Sydney region.- **Frequency Increase:** Critically, the 2015–2024 period saw more than double the number of metropolitan hail events compared to any other 10-year period since 1985, validating the 'rapidly rising' status of this peril. ##### Hazard vs. Exposure: A Critical Distinction The IAG report intelligently addresses a potential conflict with other meteorological studies that suggest a declining trend in the overall atmospheric formation of giant hail. The analysis reveals that risk is a product of both Hazard (the weather event itself) and Exposure (the value of assets in its path). While the meteorological *hazard* may be changing in complex ways, IAG's data confirms the observed frequency of damaging *metro hail events* in the populated east coast corridor is increasing. This, combined with increased socio-economic development (Exposure) in these same areas, is compounding the overall financial risk. A robust asset devaluation model must therefore quantify both the changing physical hazard and the growing value of asset exposure in this corridor. #### Future Headwinds for Property and Development The IAG report suite explicitly links its scientific findings to future structural cost increases and constraints for the development and construction industries. These recommendations serve as reliable leading indicators for future cost pressures. ##### Tougher Building Standards Ahead Both IAG's CEO and the report's factsheet call for stronger building codes to mitigate the impact of severe weather. IAG Managing Director and CEO Nick Hawkins states, "We can make a real difference by... improving building standards." The report's factsheet is more direct, recommending that "Building codes must reflect changing hazard profiles to ensure long-term durability." This points directly to higher future construction costs as new standards are mandated. ##### Rethinking Land Use Planning The report advocates for significant changes to land use planning, which will directly impact the supply and viability of future development projects. The CEO identifies a key step as "...reducing building in high-risk areas..." The report's recommendations go further, calling for "Planned relocation and buy-back schemes" in the highest-risk zones, effectively reducing development viability to zero for targeted land parcels. #### The Looming Insurability Crisis Analysis confirms IAG is navigating the sensitive topic of insurance affordability and 'uninsurable' properties through a careful communications strategy, while being explicit about the material risks in its corporate filings. ##### A Strategy of Deflection In its public-facing climate report, IAG avoids using alarming terms like 'uninsurable'. Instead, it deflects the topic to the government's own findings, citing Australia's 2025 National Climate Risk Assessment (NCRA) and its examination of risks like "rising reinsurance costs, and unaffordable premiums." This allows IAG to validate the concept of uninsurability as a government-acknowledged problem, rather than an explicit corporate threat from IAG itself. ##### The Real Risk: 'Government Intervention' The most critical finding is found not in the public climate report, but in IAG's corporate and financial filings. Here, the company is unambiguous about the consequences of rising premiums. IAG's FY25 filings state that "Significant premium price increases arising from increasing natural perils costs could increase political pressure on governments to intervene in insurance markets." This intervention is classified as a material risk that could **"reduce the size of the private insurance market."** This confirms a clear causal chain: climate change drives losses, which drive premiums to unaffordable levels, creating political pressure that results in government intervention—an outcome IAG views as a direct threat to its business model. #### Sources - [1. Severe Weather in a Changing Climate - IAG](https://www.iag.com.au/content/dam/corporate-iag/iag-aus/au/en/documents/report/iag-severe-weather-in-a-changing-climate-3rd-edition-112025.pdf)- [2. IAG launches Severe Weather in a Changing Climate report - IAG](https://www.iag.com.au/newsroom/company/iag-launches-severe-weather-in-a-changing-climate-report)- [3. Severe Weather in a Changing Climate Factsheet - IAG](https://www.iag.com.au/content/dam/corporate-iag/iag-aus/au/en/documents/report/iag-severe-weather-factsheet-3rd-edition-112025.pdf)- [4. Australia's insurance industry snapshot 2025 - Insurance Council of Australia](https://insurancecouncil.com.au/wp-content/uploads/2025/03/INCA015-Fact-Pack-2025_v2.8-1.pdf)- [5. Beyond Risk to Building Resilience - Investor Group on Climate Change](https://igcc.org.au/wp-content/uploads/2025/09/From-risk-to-resilience-report.pdf)- [6. Preliminary final report for the year ended 30 June 2024 - IAG](https://www.iag.com.au/content/dam/corporate-iag/iag-aus/au/en/documents/corporate/iag-appendix4e-preliminary-final-reports-0624.pdf)- [7. FY25 IAG New Zealand Climate-related Disclosure - IAG](https://www.iag.co.nz/content/dam/corporate-iag/iag-nz/nz/en/documents/corporate/iag-fy25-climate-disclosure.pdf)- [8. Newsroom | IAG Limited](https://www.iag.com.au/newsroom)- [9. Severe weather in a changing climate | IAG Limited](https://www.iag.com.au/severe-weather-changing-climate)- [10. Research | IAG Limited](https://www.iag.com.au/about-us/research)- [11. NRMA Insurance, Surfing Australia Expand Partnership | Mirage News](https://www.miragenews.com/nrma-insurance-surfing-australia-expand-1562463/)- [12. Climate-related Transition Planning Guidance - Consultation paper - Insurance Council of Australia](https://insurancecouncil.com.au/wp-content/uploads/2025/09/ICA-Submission_Climate-related-Transition-Planning-Guidance-Consultation-paper.pdf)- [13. Insurance Council Australia - 2025 consultation - NSW Government](https://www.netzerocommission.nsw.gov.au/sites/default/files/2025-07/Insurance%20Council%20Australia.pdf)- [14. Very Large Hail in a Warming Climate: Climatology, Trends and Losses](https://sciety-labs.elifesciences.org/articles/by?article_doi=10.21203/rs.3.rs-6196143/v1)- [15. (PDF) Very Large Hail in a Warming Climate: Climatology, Trends and Losses](https://www.researchgate.net/publication/391335892_Very_Large_Hail_in_a_Warming_Climate_Climatology_Trends_and_Losses)- [16. Select Committee on the Impact of Climate Risk on Insurance Premiums and Affordability - IAG](https://www.iag.com.au/content/dam/corporate-iag/iag-aus/au/en/documents/submission/iag-impact-climate-risk-insurance-premiums-affordability.pdf)- [17. Future of insurance - IAG / Australian Financial Review](https://www.iag.com.au/content/dam/corporate-iag/iag-aus/au/en/documents/news-release/special_report_for_iag_australian_financial_review_2025.pdf)- [18. Australia's National Climate Risk Assessment](https://www.interest.co.nz/sites/default/files/2025-09/australias-national-climate-risk-assessment-report-2025.pdf)- [19. Climate change vs insurance – EBM Insurance & Risk](https://www.ebminsurance.com.au/resources/news/climate-change-vs-insurance/)