The Insurance Council of Australia (ICA), the national body representing Australia’s general insurance industry, has urged a federal parliamentary inquiry to prioritise increased funding for local governments to improve flood defences in response to more severe and frequent extreme weather.
In its submission to the inquiry into Local Government Funding and Fiscal Sustainability, the ICA states that the process presents an opportunity for the Committee to influence community resilience and insurance affordability, particularly in high-risk areas.
The ICA indicates that intensifying extreme weather is placing growing financial strain on local economies, with councils finding it increasingly difficult to meet the demands of disaster preparedness and recovery. The ICA maintains that addressing these pressures will require significant and sustained investment from the Federal Government.
The ICA sets out a number of priority measures in its submission, emphasising the need for coordinated action across federal, state and local governments to reduce delays and accelerate investment in flood mitigation infrastructure. The ICA notes that more than 60 projects across 17 high-risk catchments in New South Wales, Queensland and Victoria have been delayed due to approval processes, funding gaps and limited council capacity.
They also recommend extending the Disaster Ready Fund into a long-term, indexed programme with a stronger emphasis on infrastructure that delivers measurable reductions in flood risk.
Further, the ICA calls for reforms to Disaster Recovery Funding Arrangements, stating that improved coordination between governments and insurers would support faster recovery funding and more consistent clean-up efforts following major disasters.
The ICA also proposes the creation of a 10-year, $30.15 billion Flood Defence Fund, jointly funded by the Federal Government and the governments of Queensland, New South Wales and Victoria, targeting 24 priority east coast catchments. The ICA notes that around 1.2 million properties are exposed to flood risk in these areas, with councils expected to play a central role in delivering mitigation projects.
According to the ICA, effective flood defences can reduce the flood-related component of insurance premiums, helping to ease cost pressures for households in high-risk communities. The ICA is scheduled to appear before the Committee on Friday 1 May and will discuss its recommendations further at a roundtable in St George, Queensland. The ICA has made its full submission publicly available.
ICA Deputy CEO Kylie Macfarlane, said: “Local councils are on the frontline of Australia’s worsening natural disaster challenge. They play a critical role in land use planning, and disaster preparedness and recovery, but the financial, regulatory, and resource constraints they face are significant and growing.
“There are around 242,000 homes with the highest flood risk in Australia, and more than 186,000 of them are not insured for flood, making them among the most vulnerable in our community. Stronger investment in flood defences, better land use planning and a more coordinated approach to disaster recovery will help reduce risk, support councils, and over time ease pressure on insurance premiums.”
