The chance of a devastating category four cyclone hitting Brisbane, the Gold Coast and northern NSW, causing tens of billions of dollars in damage, is higher than ever, according to Australia's largest general insurer.

Key points: The Natural Perils Team, which correctly predicted Australia's devastating fire season, is a team of experts assessing the impact of natural disasters

The Natural Perils Team, which correctly predicted Australia's devastating fire season, is a team of experts assessing the impact of natural disasters They have found a 20 per cent increase in the number of the most intense tropical cyclones off the Australian coast since 1960

They have found a 20 per cent increase in the number of the most intense tropical cyclones off the Australian coast since 1960 Houses in south-east Queensland and north-eastern NSW are not built to withstand cyclones

These severe cyclones, with wind speeds of up to 225-279 kilometres per hour, are more powerful than most houses in these areas can withstand.

The modelling, conducted by Insurance Australia Group (IAG) and the National Centre for Atmospheric Research (NCAR) in Boulder, Colorado, has found climate change has dramatically increased the risk of a devastating impact.

They say Australia is experiencing a 10 per cent increase in the number of the most intense tropical cyclones off the nation's coastline during the decade between 2015-25.

Alarmingly, that is the same level of increase there had been from the 1960s to 2015.

There are concerns tens of billions of dollars in damage could be done by a category four cyclone hitting a major city. ( AAP: Dan Peled )

Tropical cyclones are also maintaining maximum intensity as they move further south, closer to the major population centres, according to Greg Holland, a cyclone expert and senior scientist emeritus with the NCAR.

"It is definitely more likely than in the past that a serious cyclone could hit Brisbane," he said.

Inside the 'Natural Perils Team'

IAG claims its Natural Perils Team is unique among the world's general insurers.

The IAG Natural Perils Team predicts the potential insurance impact of severe weather events. ( ABC News: Geoff Thompson )

It is an in-house group of meteorologists, atmospheric scientists, hydrologists, engineers and mathematicians predicting the potential insurance impact of severe weather events.

Mark Leplastrier, a member of the Natural Perils Team, told Background Briefing that as insurers, they care about the impact natural disasters can have on their bottom line.

"They're the things we care about from a property risk perspective," he said.

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Last November, the team predicted this summer's fire season had the potential to be a "catastrophic billion-dollar event" and also that because of climate change, giant hail was more likely to strike in places like Canberra.

Both those things happened.

But it's the changing climate's influence on tropical cyclones worrying them most.

While tropical cyclones are becoming fewer in number overall, they are becoming more intense and now more likely to impact south-east Queensland and north-eastern NSW.

"You've got these big population centres that are right on the edge of the serious stuff," said Dr Holland.

Bruce Buckley said Australia's tropical region was moving southward. ( ABC News: Robert Koenig-Luck )

IAG's in-house veteran meteorologist, Bruce Buckley, said rising sea temperatures are the reason severe cyclone risk is increasing further south along the Australian continent.

He said once sea surface temperatures are above 26 degrees Celsius, every additional 1 degree of warming can support a one category increase in cyclone intensity.

"The extent of the tropics is expanding polewards — which means the region where tropical weather systems are supported is also extending polewards," he said.

Dr Buckley said IAG and NCAR's cyclone modelling for the Coral and Tasman Sea supports the conclusion that Australia's tropical region is expanding to the south.

He said as the tropical region extends south, these areas would see an "ongoing increase in the proportion of cyclones above mid-category three."

Not all houses can withstand a cyclone

Since the 1980s, houses along the North Queensland coast have been built to withstand cyclones, after building codes were changed in the wake of Darwin's Cyclone Tracy in 1974.

Engineer David Henderson, who is also a member of IAG's Natural Perils Team, explained this building code area is known as Region C and it runs from Bundaberg across to Darwin and all the way to Western Australia.

"Region C has a much higher wind speed that you have to design to resist," said Dr Henderson.

"The forces that come from that wind speed turn into pressure as it's pushing or trying to pull on your structure."

Cyclone Debbie caused serious damage to Proserpine Motel Lodge. ( ABC News: Jano Gibson )

Areas that don't need to withstand cyclones are designated Region A, which includes Sydney, Melbourne and much of the interior of the country.

"Then you have Region B, which is around the Brisbane area," said Dr Henderson.

"It's a buffer zone between region A and the coast for the cyclone region."

Houses in Region B are not built to withstand the category four cyclones now more likely to impact there.

Hundreds of thousands of houses in the area are particularly vulnerable because they were built before any cyclone building codes were introduced.

As chair of the committee at Standards Australia that looks after wind loads, engineer John Holmes helps to decide what building codes should be.

He said the IAG report suggests cyclone building standards would have to be moved south.

"Hopefully, we don't have major cyclones hitting some of that south-east Queensland region in order for that to happen, but I suspect that might be the case."

Dr Holmes stressed tropical cyclones remain rare, but did say areas where buildings were not designed to withstand cyclones are vulnerable.

"If cyclones move further south, south of Gladstone, then we would expect to see a lot more damage because of this lack of internal pressure in the design process."

'If I can't get my house fixed, I'm homeless'

If you want to know what it's like to live with cyclones and other extreme weather, and the impact that can have on your insurance premiums, you need to go north to Townsville, Australia's most flood-prone city.

Some residents are still recovering from the devastating flood which inundated more than 3,000 homes in February last year.

Sarah's only bathroom is a portaloo and the entire back of her house is open to the elements. ( ABC News: Geoff Thompson )

More than 12 months on, despite being insured, Sarah Little's only bathroom is a portaloo in her backyard.

The entire back half of her house, which was flooded, is wide open to the elements — just a roof propped up on rotting wooden frames.

It was only after disaster struck that she learned she was underinsured.

Ms Little is in a dispute with her insurer about how much it's willing to pay to rebuild her home. She was first offered $70,000 and then $140,000.

Sarah's insurance premium has more than doubled from $2,206 to $5,176 in three years. ( ABC News: Geoff Thompson )

When Ms Little sought a quote from an independent builder, he told her it will cost $200,000 to repair her home.

Part of the problem is that her home was built in 1930, before flood zones and cyclone building codes existed.

Rebuilding her home today means raising the floor and therefore the roof, which will also have to meet the wind load standards of Region C, which includes Townsville.

"I know what needs to happen, I know what it's gonna cost to fix, it's all about whether or not they will accept it," she said.

"The evidence says that they should. The impact of them not coming to terms and providing the resolution that's necessary is it will leave me in a situation where I can't afford to live."

"I can't get my house fixed; I'm homeless."

Cyclone- and flood-prone Townsville is also being impacted by rapidly rising insurance premiums. Ms Little's premiums have more than doubled in three years.

When she bought the house in 2017, her insurance premium was $2,206 and by last November, it had jumped up to $5,176.

"Doesn't have a proper toilet or shower, doesn't have a living room and it's $3,000 more," Ms Little said.

"Yeah, crazy."



Underinsured after disaster

Thousands of people are finding themselves underinsured after the summer's devastating bushfires, too.

Wayne and Christine can't afford to replace their four-bedroom home with the amount they received from their insurer. ( ABC News: Geoff Thompson )

As Wayne Marmont stood beside the blackened wreckage of his home in Cobargo, he told Background Briefing the insurance payment he expected to get would not be enough to rebuild the house.

"When you look at what it might cost to rebuild, yes, we were underinsured," he said.

He had lived there for 20 years with his wife, Christine.

"Everybody's in the same position," she said.

"If it's going to cost you another $500 or $600 a year to insure extra bits and pieces, you think, 'I can't really afford that, I'd rather take the chance."

"We've never built a home before."

The couple had their insurance paid out in full, including $410,000 for their home and $70,000 for their contents.

Wayne and Christine Marmont know they won't be able to rebuild the same size home, after finding they were underinsured. ( ABC News: Geoff Thompson )

"We're going to have to make some enquiries and shop around and see what's available," said Mrs Marmont.

"We're both pensioners, we have to take what we can get."

They're resilient bush people and aren't complaining, but they won't be able to rebuild the four-bedroom home they lost.

"It won't be as big a house," said Mr Marmont.

"Hopefully, it'll be a bit more comfortable"

Whether to spend money before disaster or after it

According to Mr Leplastrier of the Natural Perils Team, unless more money is spent on pre-disaster mitigation measures to better protect homes and businesses, vulnerable parts of Australia will become uninsurable as the climate changes.

Mark Leplastrier says the IAG Natural Perils Team predicted the summer bushfire season could be a catastrophic billion dollar event. ( ABC News: Geoff Thompson )

"It would be disproportionate in its impact, so it won't be an even thing felt across every single business and household at once."

"There'll be areas that will be hit first and hardest with higher premiums as things like flood regimes or cyclones or bushfires change."

There are solutions governments could pursue, including retrofitting homes that are not up to cyclone standards, something the Queensland government has already done in north-east Queensland for legacy teams, explained Dr Henderson.

ICA CEO Rob Whelan says some parts of Australia could become uninsurable if there's no investment in disaster mitigation and prevention. ( ABC: Geoff Thompson )

"A lot of houses in Townsville and other communities in the cyclone region were able to benefit from that," he said.

"It's protecting the other houses around it to an extent, because that house is less risky now, so there's less things are going to fly apart and blow apart and hit other people's houses."

Rob Whelan, the chief executive of the Insurance Council of Australia, said without mitigation some areas could become uninsurable.

"If the risk continues to grow, it's really prudent and necessary for insurance companies to be able to price that risk appropriately," he said.

"Otherwise, they'll go broke and they won't be around to pay any claims, that's not a desirable outcome at all for anybody."

"If appropriate mitigation and prevention is not done, some parts of Australia may become uninsurable in the future."

The ICA supports a recommendation the Productivity Commission made in 2015 that the Federal Government should spend $200 million a year on pre-disaster mitigation measures, with that amount matched by the states.

The Federal Government is currently committed to providing only $76.1 million in pre-disaster mitigation funding.

That's not enough, according to the ICA's Rob Whelan.

"That falls well and truly short of what we're looking for to be able to actually start to do the appropriate work across the country."

"I think it's about 97 per cent of all federal funds on disasters are spent after the disaster and not before the disaster.

"We would argue perhaps we should rebalance that the other way around."

Pre-disaster mitigation is one of the top terms of reference now being considered by the "black summer" royal commission.

In a statement, a spokesperson for Minister for Emergency Management David Littleproud said the Government was committed to a number of funding measures, including a $3.9 billion Emergency Response Fund

They did not directly address whether the Minister believes $76 million is a sufficient amount of annual funding for disaster mitigation.