Broking fraternity throws weight behind natural disaster funding findings

Broking fraternity throws weight behind natural disaster funding findings

Broking fraternity throws weight behind natural disaster funding findings NIBA has welcomed the Productivity Commission’s draft report into Natural Disaster Funding Arrangements, saying it is pleased the body recognises that national insurance markets price risk correctly.

As reported by Insurance Business last week, the commission has called for higher levels of financial support to mitigate the risk of natural disasters for communities, and the reduction of expenditure on post-disaster support and reconstruction.

NIBA CEO Dallas Booth said that the interim report was wholly consistent with the views NIBA, which it had submitted to the Productivity Commission Issues Paper on Natural Disaster Funding Arrangements in June. It also welcomed the findings that insurance markets for natural disaster risk in Australia are generally working well, with risk being priced down to individual property level.

Booth said body is also pleased the commission recognises the greater role governments can play in mitigating risks.
"The insured losses are occurring in the built environment. However, the location, nature and use of buildings is controlled by governments and government agencies. It is therefore pleasing to note that this report acknowledges that government has a greater role to play in mitigating these risks and increasing community resilience when disasters strike."

Emphasising the role of the broker, Booth said as it can be difficult or consumers to find suitable insurance cover at affordable rates in high-risk areas, consumers, property owners and business owners should seek risk and insurance advice from a qualified insurance broker.
"Insurance brokers have extensive experience in helping clients identify, assess, manage and finance their risks," said Booth. "They are able to provide expert guidance and support on a wide range of risk financing strategies, using products and financing packages from Australia and the worldwide insurance markets."
  • The Oracle 29/09/2014 10:04:00 AM
    I have no dispute with technically correct pricing to reflect risk. The numbers do tell the story - Risk verses premium. But the other story is the severe financial impact on house insurance premiums anywhere north of the Tropic of Capricorn but particularly coastal North Queensland. The majority of households have had to find extra cash to fund 4 figure premium increases - not for flood insurance but cyclone. I see two problems. Has Australia with such a small population basis got the right pricing model to sectionalise risk exposures? I would argue that the model is flawed - because the premium cost becomes unsustainable. Which leads to the second problem. How will the current pricing model survive the next catastrophic event? Frankly I think the RACQ submission touching on Tax Relief is a good stop-gap. I would go further and suggest the gap in difference say between Townsville and Brisbane domestic building insurance should be fully tax deductible. Either that or the industry adopts a whole-of-Australia rating model until risk minimisation strategies and population growth catch up.
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  • Monty Sheridan 29/09/2014 12:18:35 PM
    @ The Oracle. Couldn't agree more. Ask the people in Tully / Cardwell how to 'mitigate against risk' for cyclone. As touches on in the above article above risk factoring is now so precise its a house level... Isn't this moving away from the original principle of insurance in itself? Not a fan of tax deduction, however see the need for a disaster pool/levy, similar to EQC in NZ.
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