As attention is turning to the potential damage and insurance claims that could follow.
Speaking ahead of Alfred's expected landfall, Treasurer Jim Chalmers said approximately 4 to 4.5 million Australians were "potentially in harm's way", equating to around 1.8 million homes.
"We expect there will be billions of dollars of damage," he told ABC Radio on Thursday.
Meanwhile, new research from the Australia Institute found almost one in five Australians' homes are under-insured or uninsured, as experts in climate risk and justice warn more frequent natural disasters could push up insurance premiums — or see cover withdrawn.
Concern for regions in Alfred's path
Tropical Cyclone Alfred is set to hit south-east Queensland and northern NSW's coastlines, with damaging winds, flash flooding and dangerous storm times predicted.
At time of writing, it was, most likely between Noosa and Coolangatta.
Karl Mallon is the chief executive of Climate Valuation — a company that is part of the Climate Risk Group, which works to analyse and quantify climate change-related hazards that can affect property.
Modelling from the group last year identified the region as being at growing risk from tropical cyclones, as warming sea temperatures drive cyclones further south.
"We're in a situation where there are places where we are used to getting cyclones — the northern part of Australia. But as waters warm, the range that a tropical cyclone can reach starts to spread more south," he said.
Locals at Currumbin on Queensland's Gold Coast preparing for the arrival of Cyclone Alfred. Source: AAP / Jason O'Brien
Alfred is expected to hit as a category 2 system. Mallon said the group's modelling suggests we should expect more severe cyclones reaching the region.
Chalmers acknowledged there will be "a lot of pressure on systems including insurance" due to Alfred's path.
"We're not used to seeing a cyclone this far south and a population centre this massive," he said.
Rising premiums and withdrawing cover
Jeremy Moss, a University of NSW professor who researches the social justice dimensions of climate disasters, said the immediate impacts of Alfred will depend on the level of damage a person or household suffers — and whether or not they are insured.
"It's a very common scenario unfortunately where there's disasters occurring where people are not insured for the right amount, or the insurance companies don't cover the type of damage that is inflicted on them," he said.
"Even if they are properly insured, sometimes that can take months or even years."
Mallon said cyclones hitting areas that are not designed to cope can lead to "potentially catastrophic damage".
"If you're an insurer and you're insuring a substantial amount of the houses in a town, and a cyclone hits that town, you are up for a lot of pay outs. These are things that insurers are concerned about," he said.
He said this could lead to either significant increases in insurance premiums — or insurers withdrawing cover in certain areas.
One in five Australians 'uninsured or under-insured'
Rising insurance costs are already pricing families out with potentially devastating consequences.
The average middle-income family would be at risk of losing three-quarters of their wealth if their home was destroyed without coverage, according to new research from the Australia Institute.
One in five Australians polled by the think tank are uninsured or under-insured, representing around 1.4 million homes at risk.
“Australian families are facing an almost impossible choice when it comes to home and contents insurance,” senior economist Matt Grudnoff said.
'Knock-on' effect and a 'new normal'
Mallon described insurance as an "international market" that can have broader knock-on effects.
"When there are extreme events and insurers have very high losses, they potentially need to increase premiums to recover those losses. That can be in Australia, but it could also mean that for example in Australia, we are affected by the losses for the fires in Los Angeles or the floods in central Europe. These things have a knock-on effect," he said.
"What we're seeing generally is the cost of insurance is going up — not unexpectedly, given we are seeing the number and severity of extreme events increase.
"Everyone's paying to some extent, but those in harm's way are definitely seeing very severe increases in premiums."
Data released by the Insurance Council of Australia (ICA) last August showed the impact of extreme weather on the country's economy has more than tripled over the last three decades.
Following floods along Australia's east coast in 2022, found extreme weather events over the past 12 months had cost every Australian household an average of $1,532.
Mallon said the impacts of climate change are "occurring much more quickly than we'd expected".
"We need to recognise that this may be a new normal that we're going to have to adapt to, and we really need to start to prepare community and property to cope with this new environment — otherwise we're going to see communities, towns, cities where unaffordable insurance becomes the norm."
When faced with increasing numbers of disasters with increasing severity Moss argues that a "society-wide" response is warranted.
"It's not just the weather that's causing harm, it's how we respond to that harm," he said.
"At the moment, I think we're in danger of responding in a way that really compounds the problem that the natural disasters are creating."
What are insurance companies saying about Alfred?
The treasurer said he has been in touch with the major insurance companies about preparations that are being put in place.
"I'm confident that the insurance companies know what they need to do, I'm confident that they're putting in place the arrangements to process lots of claims, and I'll obviously stay in pretty frequent contact with the chief executives to make sure that's the case," Chalmers said.
Insurance companies went under the microscope following the 2022 floods, with a federal parliamentary inquiry concluding the industry "failed too many people" with delays in communication, poor claim management and other issues uncovered.
Treasurer Jim Chalmers said he has been in touch with the major insurance companies about preparations for Cyclone Alfred. Source: AAP / Lukas Coch
"The safety and wellbeing of the community is of paramount importance and while it is still too soon to determine the true intensity of Tropical Cyclone Alfred, insurers stand ready to support customers and to help alleviate the stress and uncertainty associated with this event," chief executive Andrew Hall said.
"Insurers have placed disaster response specialists on standby to move into affected communities and assist customers with claims as needed."
Suncorp chief executive Steve Johnston said the insurer was well-prepared to support customers.
“We now have a good idea of where the cyclone is going to hit and which customers, homes and businesses are in the threat zone," he said in a statement on Thursday.
"Given the anticipated high volume of claims, there may be some delays, but rest assured we are here to help."
Insurer IAG also released a statement on Wednesday, saying it is "well prepared to support all our customers who may be impacted".
The statement also noted the federal government's Cyclone Reinsurance Pool which "provides protection for damage caused by cyclonic wind and any cyclone-related water damage occurring for 48 hours after the cyclone is downgraded by the Bureau of Meteorology".
Questions about the pool have been raised over its effectiveness, including calls from the Australian Consumers Insurance Lobby last July to address a "disparity" in insurance premiums between regions.
— With additional reporting from the Australian Associated Press
