Economic Scenarios for Australia’s Insurance Climate Vulnerability Assessment

Climate change poses growing risks to economies worldwide, increasing exposure to natural disasters like bushfires and floods. Addressing this challenge requires either costly decarbonisation efforts or facing escalating physical risks. Scenario analysis helps businesses and policymakers assess these trade-offs and plan effectively. To evaluate climate impacts on household insurance, APRA’s Insurance Climate Vulnerability Assessment (ICVA) examines affordability and resilience to climate risks. Oxford Economics Australia provided macroeconomic forecasts and income projections, modeling two key scenarios—Delayed Transition (DTS) and Current Policies (CPS)—aligned with global emissions pathways.

This report outlines key scenario narratives and findings, offering insights into climate risks and financial sector resilience.