Launch of Australian Resilience Index shows the threat of financial insecurity

Justin Delaney

Zurich Financial Services Australia (Zurich) has released Australia’s first comprehensive Resilience Index, revealing more than one in five Australians face significant vulnerability, driven predominantly by financial insecurity.

The Australian Resilience Index – developed by Zurich in collaboration with Mandala Partners, the RedBridge Group and Accent Research – utilises two million proprietary and public data points and represents the first comprehensive, quantitative assessment of resilience across Financial, Health, Social and Environmental parameters at a local community level^[1].

Resilience, or the ability of people and communities to withstand and recover from shocks, is measured and aggregated across four dimensions:

• Financial Resilience, including savings, insurance coverage and superannuation balances;
• Health Resilience, including physical & mental health conditions, access to care and lifestyle factors;
• Social Resilience, such as crime rates, community participation and belonging; and
• Environmental Resilience, including planning, infrastructure and service availability.

Overall resilience was found to be most correlated with financial wellbeing, over social, health or environmental factors. Within individual measures, insurance coverage was identified as a key driver of overall resilience, with communities registering insurance penetration of 50 per cent or more being five times more likely to have higher financial resilience and four times more likely to have higher health resilience.

Of the nearly 2,500 local areas analysed, Cottesloe in Western Australia (WA) was identified as the nation’s most resilient, driven by the highest average dividend income rate in the country (16 times the national average), seven times higher average superannuation balances, double the insurance penetration, a third of the long-term health conditions, half the smoking rate and double the level of community volunteering.

Of the ten least resilient areas in the nation, half are located in the Northern Territory (NT), including the Tiwi Islands which scored lowest overall. Residents in this area are over 80 times more likely to live in crowded housing, experience five times the national rate of crime, have access to zero hospitals within 15 kilometres, and are more likely to experience weakened social belonging than any other local area.

Middle-aged males (35-49) are Australia’s most resilient demographic group, driven by high income levels (81 per cent earning above the median, versus 60 per cent of females the same age), higher superannuation balances & dividend incomes, and far lower rates of primary caregiving. This is despite poorer health resilience, driven by obesity, smoking and alcohol consumption, and lower social resilience, due to weakened belonging and “feeling like a stranger in their own country”.

Financial resilience

• Cottesloe (WA) is the most financially resilient community in the country, while the Torres Strait Islands in Queensland (QLD) is the least.
• Across jurisdictions, the Australian Capital Territory (ACT) has the highest and QLD the lowest levels of financial resilience.
• Across all communities, financial resilience rises sharply with age and is substantially stronger among men.

Health resilience

• Toorak in Victoria (VIC) has the highest health resilience in the country, while Bridgewater-Gagebrook in Tasmania (TAS) has the lowest.
• Across jurisdictions, New South Wales (NSW) has the highest and TAS the lowest levels of health resilience.
• Younger people (15–34) exhibit the highest health resilience, driven by substantially lower rates of obesity, long-term health conditions, smoking and care requirements. This is despite markedly higher rates of mental health conditions.
• Women are healthier on average than men, who are 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

• City Beach (WA) has the highest levels of social resilience in the country, while Thamarrurr (NT) has the lowest.
• Across jurisdictions, the ACT has the highest and the NT has the lowest levels of social resilience.
• Social resilience is lowest among younger people (15–34), driven by half the rate of partnered relationships, lower rates of community participation, and an 83 per cent increased likelihood of experiencing household crime.
• Across the board, women are less socially resilient than males, 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

• Surry Hills (NSW) has the highest levels of environmental resilience in the country, while the Tiwi Islands (NT) has the lowest.
• Across jurisdictions, VIC has the highest and the NT the lowest levels of environmental resilience.
• Males and people aged over 34 are far more likely to have higher environmental resilience than other cohorts, driven by higher home ownership rates, living in areas with stronger economic & infrastructure investment and increased access to services.

Justin Delaney, Chief Executive Officer, Zurich said: “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.”

“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.”

“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,” Mr Delaney said.

Adam Triggs, Partner, Mandala said: “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.”

“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.”

“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,” Mr Triggs said.

Kos Samaras, Director, Strategy & Analytics, the RedBridge Group said: “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.”

“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,” Mr Samaras said.

More about the Australian Resilience Index.