Up to $200 million a year should be given to state and territory governments for natural disaster risk mitigation projects, a major report has recommended.
Last week, the Productivity Commission released its final report into natural disaster funding, finding that the current arrangements discouraged proper risk mitigation.
NIBA lobbied the Commission extensively on the need to reduce insurance exposures and cost.
“We argued strongly that the insurance process for Australians and particularly those exposed to natural disasters will only be effective if it is affordable,” NIBA CEO Dallas Booth says.
“We’ve noticed substantial frustration for brokers trying to get the right cover at the right price for their clients.
“If the cost of pooling the risk rises to a level that the community can’t afford then the consequence are under-insurance and non-insurance. When major losses occur, this causes substantial community disruption.”
The report also recommends governments at all levels make their natural hazard data publicly available, as well as partnering with the insurance industry to share information.
Justice Minister Michael Keenan says the Federal Government will consult with stakeholders before making a full response to the report.
“I have made it clear that the Australian Government is not proposing any radical reductions in the funding support it provides to the states. Instead we will seek to pursue a more modest and gradual approach to getting the balance of mitigation and recovery funding right, in close consultation with state governments.
“Mitigation funding will ensure the most disaster-prone states are able to address their greatest risks.
“We want to work with the states to understand the scope of mitigation projects they wish to pursue, and find a way to support these projects without making dramatic cuts to recovery funding.”
For more detail on the Productivity Commission’s inquiry, view Insurance & Risk Professional’s in-depth report here.
The full report can be viewed here.