APRA executive board member Geoff Summerhayes warned that the country needs greater national investment in natural disaster mitigation and resilience to ensure that insurance remains available and affordable in disaster-prone areas.
“APRA’s view is that declining insurance affordability and accessibility in Australia’s north can best be meaningfully and sustainably addressed by tackling the root cause: the high, rising, and volatile cost of natural disasters. The most effective way to do this is through greater investment in mitigation to protect homes, businesses, and infrastructure from damage,” Summerhayes said.
ICA chief executive officer Andrew Hall commented that the industry backs the regulator’s suggestion as it would reduce pressures on insurance premiums.
“Without mitigation, the damage bill in vulnerable communities – northern Australia in particular – will continue to soar. At present, only 3% of natural disaster budgets are spent on prevention,” Hall said.
“The cost of inaction will ultimately cost governments and communities much more than sensible, timely, and effective investments in prioritised mitigation programs,” he continued.
“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.”