Zurich index finds financial insecurity drives vulnerability

Zurich has launched an Australian Resilience Index that ranks nearly 2,500 local areas and identifies financial insecurity as the main source of vulnerability.

More than one in five Australians face significant vulnerability, according to a model developed with Mandala Partners, RedBridge Group and Accent Research using two million proprietary and public data points.

The index measures resilience across four areas: financial, health, social and environmental. It defines resilience as the ability of people and communities to withstand and recover from shocks, then aggregates local scores to show where vulnerability is concentrated.

Its central finding is that overall resilience is most closely linked to financial wellbeing, ahead of social, health and environmental factors. Insurance coverage emerged as a particularly strong indicator, with communities showing insurance penetration of 50 per cent or more five times more likely to record higher financial resilience and four times more likely to record higher health resilience.

At a local level, Cottesloe in Western Australia ranked as the country's most resilient community. The Tiwi Islands in the Northern Territory ranked last overall and also came bottom on environmental resilience.

Cottesloe's ranking was driven by high dividend income, stronger superannuation balances, higher insurance penetration, lower rates of long-term health conditions, lower smoking rates and higher levels of volunteering. By contrast, residents in the Tiwi Islands were more than 80 times more likely to live in crowded housing, experienced crime at five times the national rate and had no hospitals within 15 kilometres.

By category

The index also identified leaders and laggards across each of the four dimensions. Cottesloe ranked highest for financial resilience, while the Torres Strait Islands in Queensland ranked lowest. Toorak in Victoria topped the health resilience measure, while Bridgewater-Gagebrook in Tasmania ranked last.

For social resilience, City Beach in Western Australia ranked first and Thamarrurr in the Northern Territory ranked last. Surry Hills in New South Wales led the environmental resilience measure, while the Tiwi Islands again came last.

Results also varied by jurisdiction. The Australian Capital Territory ranked highest on both financial and social resilience, while Queensland had the lowest financial resilience and the Northern Territory the lowest social resilience. New South Wales led health resilience and Tasmania ranked last, while Victoria led environmental resilience and the Northern Territory again came bottom.

Demographic split

The index found middle-aged men aged 35 to 49 were Australia's most resilient demographic group. The report linked that result to higher incomes, higher superannuation balances, greater dividend income and lower rates of primary caregiving.

That advantage persisted despite weaker health and social outcomes for the same group. Men in that age bracket had poorer health resilience because of obesity, smoking and alcohol consumption, and lower social resilience through weaker belonging and a greater sense of alienation.

Across all communities, financial resilience rose sharply with age and was substantially stronger among men. Younger people aged 15 to 34 had the strongest health resilience because they recorded lower rates of obesity, long-term health conditions, smoking and care requirements, although they also showed markedly higher rates of mental health conditions.

Women, on average, scored better on health resilience than men. Men were almost three times more likely to report unhealthy alcohol consumption, 50 per cent more likely to smoke and 24 per cent more likely to be overweight or obese.

Social resilience was weakest among younger people, with the index pointing to lower rates of partnered relationships, lower community participation and a higher likelihood of household crime. Women also scored lower than men on social resilience, including being four times more likely to be a single parent, 30 per cent more likely to feel uncomfortable expressing political views and 27 per cent more likely to report victimisation.

Environmental resilience was stronger among men and people aged over 34, which the analysis linked to higher home ownership rates, stronger economic and infrastructure investment in the areas where they live, and better access to services.

Justin Delaney, Chief Executive Officer of Zurich, said insurance affects every part of the resilience model.

"Insurance sits at the intersection of these four dimensions of resilience. It protects financial stability when shocks occur, supports health & wellbeing through prevention and recovery services, and relies on - and contributes to - social cohesion and environmental preparedness by pooling risks and supporting communities," Delaney said.

He said the company viewed the research as a way to understand broader pressures facing households and communities.

"As Australia's only major composite insurer, Zurich has a responsibility to use our data and insights broadly and systemically - to better understand the pressures facing our customers and the community to continue to evolve our propositions around prevention, early intervention and long-term protection," Delaney said.

Delaney said the data could also inform policy and spending choices.

"We believe this Index can provide a unique and valuable perspective on a range of critical policy conversations and ways to target and prioritise public & private investments. More broadly, it highlights our increasing ability to understand both the prevailing risk and resilience environment and the benefits and return that accrues to early and proactive intervention at both a community and individual level," he said.

Adam Triggs, Partner at Mandala, said the breadth of risks facing Australians had increased the importance of measuring resilience in more detail.

"Australians face multidimensional risks - financial, economic, environmental, technological, social, geopolitical and health - and these risks are more correlated than ever before. The focus on resilience given the breadth, depth and unpredictability of these risks has never been more important," Triggs said.

He said new datasets had made that possible.

"Luckily, modern datasets and new data science techniques allow us to measure resilience at a granular level with significant clarity. This is what we do at Mandala, and we're excited to use this Index to help governments, businesses and households to measure and improve their own resilience and better target support," he said.

Triggs said the model was intended to answer practical questions about which communities were most exposed to economic, health and environmental shocks.

"Which communities will be impacted most by interest rate rises? Which communities will bear the burden of chronic health conditions? How will technology changes impact different communities? Why are some communities turning to political extremes? Which communities are most at risk in the upcoming bushfire season? For the first time, this index lets us answer these questions and many more," he said.

Kos Samaras, Director of Strategy & Analytics at the RedBridge Group, linked the data to political and social behaviour.

"We tested this at the Secret Harbour by-election in Western Australia. The suburbs scoring lowest on financial and health resilience told us what was coming before a single vote was counted," Samaras said.

He added: "This index shows us where Australians have run out of buffer. When savings, insurance and super are thin, every shock lands harder, whether it's a rate rise, a health scare, losing a job or a natural catastrophe. Those communities don't just feel it in their bank balance, they demonstrate it in their trust in institutions and in how they vote. For governments and businesses trying to understand where the country is heading, the Resilience Index is now one of the most important lenses we have."