The Insurance Council of Australia has welcomed a call from the Australian Prudential Regulation Authority (APRA) for significant funding for investments in natural disaster mitigation.
APRA executive board member Geoff Summerhayes has stated that “high, rising and volatile costs” of natural disasters is leading to declining insurance affordability and accessibility.
He added that tackling the root cause through greater investment in mitigation to protect homes, businesses and infrastructure from damage was the most effective way of meaningfully and sustainably addressing the issue.
ICA Chief Executive Officer Andrew Hall says the industry supported APRA’s view that substantial investments in mitigation were required to protect high-risk communities from the impact of extreme weather events.
“The clear and urgent message to all levels of government from APRA, and from many other organisations including the Productivity Commission and from numerous inquiries, is that investments in mitigation that reduce the physical risk to properties is the only sustainable way to reduce insurance premiums,” said Hall.
“Without mitigation, the damage bill in vulnerable communities – northern Australia in particular – will continue to soar. At present only 3 per cent of natural disaster budgets are spent on prevention.
“The cost of inaction will ultimately cost governments and communities much more than sensible, timely and effective investments in prioritised mitigation programs.
“The ICA has been working closely with federal Treasury to identify areas of high exposure where mitigation projects should be considered as a priority. Many schemes are at an advanced stage and only require approvals and funding to go ahead.”
