The Insurance Council of Australia (ICA) has unveiled the industry's policy recommendations for the next Federal Government, calling for a comprehensive range of initiatives that will protect hundreds of thousands of Australians living in harm's way from natural disasters, as well as improve insurance affordability outcomes for home owners and businesses.
The centrepiece of the policy document, Advancing Australia's Resilience, is a call for a Flood Defence Fund (FDF) - a $30.15 billion investment over 10 years to protect the country's most at-risk catchments in Queensland, New South Wales and Victoria (list in PDF under Useful Links).
The proposed FDF would split the $30 billion cost between the Federal Government and the State Governments of New South Wales, Queensland, and Victoria, which are the jurisdictions with the most high and extreme flood-exposed properties.
The FDF would:
- Deliver new critical flood defence infrastructure ($15 billion)
- Strengthen properties in harm's way ($5 billion)
- Help local Government undertake managed relocation (buy-backs) ($10 billion)
- Future-proof existing flood mitigation infrastructure ($150 million)
Flood is Australia's costliest extreme weather type, but of the 1.36 million properties facing flood risk in Australia it is estimated that more than half do not meet modern flood resilience planning and building standards. Around 298,000 of these properties - 225,000 homes and 73,000 businesses - face at least a two or five per cent chance of flooding each year.
The FDF is a big idea to confront a big problem - a problem that is predicted to worsen with a changing climate and growing population. The floods of February-March 2022, three years ago this week, caused the loss of 23 lives, devastated communities, and saw insured losses of almost $6.4 billion.
Striving to protect our communities against a repeat of this level of devastation should be the priority of every policymaker.
also outlines other initiatives that would deliver improved outcomes for Australian homeowners and businesses, including:
- Resilience and mitigation measures: strengthening the Disaster Ready Fund; better data and flood mapping; improving disaster response and funding arrangements; cyclone-proofing Northern Australian homes; better land use planning; improving building resilience
- Regulatory and legislative reform: abolishing state insurance taxes, right-sizing regulation; undertaking civil liability reform; expanding home ownership with Lenders Mortgage Insurance
- Business and industry support: lowering risk for small businesses and not-for-profits; addressing motor trades skills shortages; strengthening motor trades skills shortages; enhancing cyber security; improving outcomes for strata communities
The ICA is committed to working closely with the State and Federal governments on solutions that will help future-proof Australia.
Quotes attributable to ICA CEO Andrew Hall:
Insurance premiums have risen over the past few years through a perfect storm of high inflation, taxes and regulations, extreme weather events and ever-increasing risk factors.
In a cost-of-living crisis, it is important that all our efforts go into measures which will bring downward pressure on premiums, and this can only be achieved through a strong partnership between insurers and governments.
That's why Advancing Australia's Resilience includes a big idea to combat a big problem over the long-term - the creation of a $30.15 billion, ten-year Flood Defence Fund to protect Australians from our costliest natural disaster.
Consumers however cannot wait for mitigation and risk reduction programs to offer the critical protection and price relief needed. Immediate action is also essential - with tax and regulatory reform offering the best opportunity to ease cost pressure on insurance premiums in the near term.
Insurers stand ready to play their part in this important reform, but significant new government investment is the only way to reduce extreme weather risk and must underpin our future collaborative endeavours.
We know there is no silver bullet. However, if we don't do anything, insurance customers, governments and taxpayers will continue to pick up the much higher costs of rebuilding every time there is a natural disaster and insurance risks becoming unavailable and affordable for those Australians who need protection the most.
Quote attributable to Kate Cotter, Founder and CEO, Resilient Building Council:
Large-scale resilience investment and innovation is urgently required for Australia to reduce risk and cost of living pressures. We support ICA's call for big ideas to solve big problems, including the Flood Defence Fund and expansion of the Resilience Ratings Scheme.
