Greater flood mitigation would impact premium levels

Greater flood mitigation would impact premium levels | Insurance Business

Greater flood mitigation would impact premium levels

Federal and State governments should increase spending on flood mitigation plans in an effort to reduce the clean-up costs borne by governments and the taxpayer, which would also drive down insurance premiums according to the Insurance Council of Australia (ICA).

ICA chief executive Rob Whelan has also been blunt about the levels of premiums in flood affected areas stating that insurers’ price and manage risk and those who seek insurance in those areas pay premiums that reflect that risk. However these premiums could be reduced by all levels of government investing in the building of permanent mitigation measures such as levees and flood barrages.

Whelan says where towns are protected by such measures premiums for those living inside the flood defences are 60 to 70 per cent lower than similar policies in areas without flood mitigation measures.

He adds that spending on mitigation is insufficient with the Federal Government contribution of $30 million per year and modest state allocation of funds falling short of what is required to protect communities and to avoid high levels of state spending after every major emergency.

According to Whelan the costs of a $15 million levee around a mid-size town would be recouped 100-fold over the life of the levee. He points to towns in northern NSW which avoided the worst of the flooding due to permanent levees in contrast to those in Queensland which suffered widespread damage.