The growing frequency and severity of bushfires are major concerns for many homeowners and businesses, as economic and insured losses from incidents grow in many parts of Australia and the world.
As outlined in Gallagher's global World on Fire report, one of the factors cited for the increase in bushfire events globally is ongoing change in land use, including property development in or in close proximity to bushland areas or the urban bushfire interface, also referred to in the United States as wildland urban interface (WUI).
How changing weather patterns and population shifts contribute to bushfire severity
In Australia, there are heightened weather risks across the country, heatwaves and floods due to severe convective storms and population growth in areas exposed to these risks1.
At the same time a warming planet, in tandem with shifts in precipitation patterns and invasive plant species (i.e. grasses) have added to increased frequency of fires2.
Of relevance for bushfire threats is the concept of 'weather whiplash', where periods of extreme wet weather and vegetation growth are then followed by periods of very hot and dry weather. These swings between very wet and very dry periods are exacerbated by natural climatic cycles, such as the El Niño Southern Oscillation, in addition to anthropogenic (human-caused) warming.
Weather whiplash, combined with invasive plant species, climate change and growing population and business encroachment into bushfire-prone former bushland, is driving a shift in bushfire exposure — leaving rural industries and communities especially vulnerable.
Urban sprawl is putting more communities at risk
Some developments in semi-rural areas may be poorly planned and do not take enough account of the bushfire risk3.
In addition to threatening homes, fires create both direct and indirect risks for businesses and communities. Direct risks include damage to buildings, vehicles, machinery and infrastructure, as well as harm to land and crops. Indirect risks arise from supply chain disruptions and operational downtime, impacting businesses both in the immediate fire zone and those further afield.
Indirect risks can be just as disruptive and costly, causing contingent business interruption from disrupted supply chain, or loss of attraction for tourism and hospitality businesses, such as the effect of the 2019‒20 Black Summer fires on New South Wales South Coast holiday destinations.
As Mike Keenan, Risk Control Manager for Gallagher National Risk Control, notes in the Gallagher global World on Fire report, wildfire/ bushfire exposure has also become a significant issue for the agricultural sector in terms of both crop and livestock losses. Rural industries such as wine production and forestry are also vulnerable to heightened bushfire risk.
Utility firms, particularly power and water, face the prospect of physical damage to infrastructure from bushfires as well as potential liability for ignitions caused by their equipment. Destructive fires can be triggered by an electrical transmission line failure.
Councils themselves, as well as their subcontractors, also face these risks. Small operators often encounter difficulties obtaining bushfire liability coverage when working with local councils.
Mitigating bushfire risks
Understanding both the historical and projected patterns of extreme weather events or natural disasters in your area is critical for assessing potential bushfire threats.
This includes determining your property's Bushfire Attack Level — a key indicator of its bushfire risk based on location and surroundings — and identifying vulnerabilities within your property, plant, equipment and supply chains. By integrating robust resilience measures into your planning, you can better safeguard your assets and operations against escalating climate and disaster risks.
Gallagher provides specialist expertise in climate risk assessment and mitigations — which is becoming increasingly critical for many companies and organisations with valuable assets and exposures in weather risk prone areas.
Gallagher natural catastrophe and climate change services provides information and tools to strengthen a business's insurance program and the organisation's ongoing resilience. Our natural disaster and climate change risk consultancy services provide comprehensive risk analysis, including modelling for hazards, catastrophes and climate change, assessments of vulnerability and evaluations of potential losses due to catastrophes.
At a base level there are a number of mitigations that can be implemented to reduce fire risks4, including maintaining your roof and gutters, clearing brush/undergrowth and thinning tree density and integrating fire-resistant materials in structures.
As always, businesses should ensure they prioritise the health and safety of staff and have tried and tested continuity plans to reduce disruption. This includes having contingencies in place if air quality is poor due to smoke pollution.
Loss control investments can help mitigate physical and business interruption losses, while insurance is there to pay claims and restore livelihoods when the worst happens.
