Understanding Australia’s Weather Patterns
Australia’s climate is influenced by two alternating weather patterns, La Niña and El Niño. These weather patterns are measured by the Southern Oscillation Index, which records interactions between the atmosphere and the ocean air.
What Happens During an El Niño Event?
An El Niño event involves sea temperatures becoming warmer than the air across the central and eastern Pacific Ocean. El Niño is characterised by:
- Lower than average rainfall
- Higher and more extreme temperatures
- Higher fire danger
Bushfires and El Niño
Bushfire events often occur during the El Niño cycle:
- The Ash Wednesday fires in 1983
- The major bushfires of 2002–2003 and 2006–2007
- The 2019 bushfires, up until August of that year
Other Factors That Influence Weather
El Niño is just one of many variables that impact climate. Other influential factors include:
- Barometric pressure
- Local geography
Why Understanding Weather Matters
An understanding of weather patterns allows weather-sensitive industries like agriculture, construction, and tourism to plan ahead and prepare for reasonably predictable weather events.
Did You Know?
“El Niño—which means ‘the little boy’ or ‘the Christ child’ in Spanish—is part of the most influential natural climate pattern on the Earth, the El Niño-Southern Oscillation, usually referred to as ENSO.”
— Insurance Information Institute, 2022
The Cost of El Niño-Linked Bushfires
- $2.46bn – Normalised cost of claims from the 1983 Ash Wednesday bushfire
- $2.32bn – Cost of claims from the 2019/20 bushfires in NSW, QLD, VIC, and SA
- $839m – Normalised cost of claims from the 2003 Canberra bushfire
(Insurance Council of Australia, Historical Catastrophe List, 2022)
What Insurance Should You Take Out – and What Can It Cover?
Preparing for Weather-Related Events
It’s important for businesses to understand how their insurance cover could respond in the event of weather events caused by El Niño, such as bushfires.
Types of Cover and Potential Benefits
Business Pack
Helps safeguard your business premises and contents against:
- Damage caused by fire, storm, or accidental damage
- Equipment or machinery breakdown
- Employee dishonesty
- Glass damage
- Legal issues (e.g., public and products liability)
- Tax audits
- Theft, and theft or loss of money
- Business interruption – cover for financial loss due to interruption from an insured event
- The risk of flooding
Motor Insurance
Takes care of your valuable business vehicles with cover to help:
- Replace or repair vehicles damaged by fire or water
- Cover damage to another person’s vehicle
- Repair your vehicle after an accident or replace it if written off
- Replace a lost or stolen vehicle
- Provide legal liability protection
Workers Compensation
Covers:
- Employee wages
- Rehabilitation and medication
If your workers become sick or injured through their work.
Limits, Excesses and Exclusions
Policy exclusions, excesses, and limits of liability can vary greatly depending on:
- Your insurer
- The specific needs of your business
Case Study: Business Interruption Due to Bushfire
Bushfire-Related Closure and Insurance Support
Brian runs a water fun park in a popular tourist town. A nearby bushfire didn’t damage his property, but authorities closed the main highway into town with a prevention of access order. As a result, visitors couldn’t reach the park, and Brian had to close temporarily.
Since the interruption was caused by an official road closure (not simply tourists choosing to stay away), he was able to claim under business interruption insurance, helping him recover lost revenue.