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Authorities are bracing for a forecast El Nino that could cause extreme conditions in the coming months. As the world warms, economic costs are mounting and so are concerns over insurance for households. Alan Kohler explains.

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00:02It looks like we're in for a big El Nino this year.
00:05Here's the Southern Oscillation Index, which measures El Nino events via air pressure anomalies
00:10between Tahiti and Darwin.
00:13Anything below minus seven is an El Nino, and 1983, 1997 and 2015 were big ones, accompanied
00:22by terrible droughts.
00:242026 is already at that level.
00:26In fact, this year is looking worse than 1997 and 2015.
00:31Separately, 2026 looks like being the hottest year on record, with the global average temperature
00:37already reaching the 1.5 degrees of warming that was the maximum everyone agreed to at
00:43the Paris Climate Conference in 2015.
00:46Now even the most optimistic forecast is for 1.9 degrees of warming by 2050.
00:52But, if the countries that signed the Paris deal just meet their pledges and targets,
00:57warming will be 2.2 degrees, not 1.5 or even 1.9.
01:02If only the targets are met, not pledges, it'll be 2.6 degrees.
01:07And if countries keep doing what they're currently doing, that is continue with existing policies
01:12and actions, we're heading for as much as 2.9 degrees of warming.
01:17Europe and North America are already experiencing what 1.5 degrees of warming feels like.
01:22So double that.
01:24Preparing for the result of what the world is heading for now should obviously be the focus
01:29of policy, not hoping something will change.
01:32It's partly about insurance.
01:35APRA recently published an insurance scenario analysis, estimating that with 1.8 degrees of
01:40warming, 26% of Australian households won't be able to afford insurance by 2050.
01:46That's a million more than are uninsured now.
01:49And that's only with 1.8 degrees, which we're not far off.
01:52This year's El Niño is likely to be a preview of what's coming.
01:56And fires from it could bring that number of uninsured forward.
02:00Can we really have a million Australian families uninsured?
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