08/09/2022 | Press release | Distributed by Public on 08/09/2022 04:47
IAG, parent company of small to medium business insurer, CGU, today released new research which highlights the acute economic and social impacts that natural disasters have on small businesses and their communities, and the fundamental role insurance plays in supporting recovery and building resilience.
The backbone of regional and rural economies: small business and community resilience report (the report) commissioned in partnership with SGS Economics, analyses the effects natural disasters have on small businesses, with in-depth case studies conducted on two significant events, the Townsville Floods (2019) and Black Summer Bushfires (2019-20).
The report found, on average, between 65 per cent and 72 per cent of the total economic impact from the floods and bushfires was attributed to small businesses.
The report estimates the economic impact of the 2019 Townsville floods to be a $2.5 billion reduction in GDP, with the impact to small businesses estimated at $1.5 billion.
CGU Executive General Manager, Damien Gallagher, said the report recognises that small businesses, the nation's largest employer engaging more than 4.7 million people, are at the greatest economic risk when faced with natural disasters, with risk awareness, underinsurance and a lack of mitigation activities critical factors.
The report highlights an ACCC survey1 of 75 small businesses in the Townsville area which found:
The economic impact of the Black Summer bushfires (2019-2020), according to the report, is estimated as a $2.7 billion reduction in GDP, with businesses in NSW, VIC, SA and QLD impacted. In NSW alone, it's estimated that small businesses suffered a $1.8 billion reduction in GDP.
Damien Gallagher
CGU Executive General Manager
"We know natural disasters will continue to increase in prevalence due to a warming climate. Research shows that a dollar spent on mitigation can save at least two in recovery and reconstruction costs. It's critical that we now see governments identify and invest in mitigation activities, as well as stronger building codes and improved land use planning."
Research results will help in forming sustainable solutions to ensure small businesses, particularly those in regional and rural areas, are better prepared for future catastrophic events.
Key recommendations in the report include:
IAG, whose brands also include NRMA Insurance, CGU and WFI, has long championed action on climate change, driven by its purpose - to make your world a safer place. IAG plays a critical role in communicating, managing and mitigating the evolving risks that individuals and communities face across Australia and New Zealand under the changing climate.
1 Northern Australia Insurance Inquiry report- ACCC (2019)