Every mayor in Queensland has signed an open letter telling Prime Minister Anthony Albanese that proposed changes to federal disaster recovery funding will push insurance premiums higher in Australia's most catastrophe-exposed state.
The letter, reported on 7 October 2026, carries the signatures of all 77 Queensland mayors alongside the Local Government Association of Queensland (LGAQ), the Royal Automobile Club of Queensland (RACQ), the Queensland Farmers' Federation, Q Shelter and Volunteering Queensland. RACQ is both a signatory and a general insurer, which places an underwriter inside a dispute that has so far been framed as a fight between tiers of government.
"Your proposed funding cuts will mean Queensland communities are forced to choose which assets not to rebuild, while facing higher insurance premiums, reduced community safety, and bankrupt councils," the letter states.
Queensland Disaster Recovery Minister Ann Leahy, who has written separately to the Prime Minister, said in the letter the state already pays its "fair share" and would support changes that make the system "simpler and faster". The letter argues that per capita, Queensland residents pay more than 50 per cent more for disaster response and recovery than New South Wales residents, and three to five times as much as residents of other states and territories.
In June 2026 the federal government proposed replacing the Disaster Recovery Funding Arrangements (DRFA) with a new Disaster Recovery Funding Framework, reducing the Commonwealth contribution from around 64 per cent to a 50-50 split with the states.
Read next: Queensland mayors back calls for more federal funding for extreme weather
A federal government spokesperson said the reform was driven by disasters becoming more frequent and intense while funding arrangements had not "evolved at the same pace", and urged the state to engage "rather than stoking fear among councils and communities". The spokesperson said the changes would make claiming faster and reduce red tape, and that no funding arrangements or recovery supports would change for the coming season.
The premium argument in the letter rests on betterment, the Queensland program that rebuilds damaged public assets to a more resilient standard rather than to their original specification. Betterment has operated in Queensland since 2013 and is funded jointly under the DRFA. It pays for raised floodways, strengthened bridges and upgraded drainage, which is the category of hard mitigation that insurers have repeatedly identified as the lever on pricing.
LGAQ modelling, submitted to the National Emergency Management Agency (NEMA) in a 374-page response covering all 77 Queensland local government areas, estimates that Queensland communities would have missed out on at least $2.8 billion in federal support had the proposed model operated since 2018. The association has separately said more than $1 billion in betterment funding would not have flowed to the state over the past 13 years.
Read next: ICA calls for Australian governments to lift funding for extreme weather
The exposure those works are meant to reduce is concentrated in the same state. The Insurance Council of Australia (ICA) reported in April 2026 that extreme weather generated $4.8 billion in insured losses nationally in 2025, up 727 per cent on the prior year, across 294,000 claims with an average claim cost of $16,471. More than $4.1 billion of that came from Queensland alone, following four severe events in 12 months. The ICA put the total economic cost, including uninsured losses, above $8.6 billion.
The council's policy position has been consistent: the most effective way to ease cost pressure is physical infrastructure. That position sits behind its call for the Disaster Ready Fund to become a ten-year rolling program and for a dedicated flood defence fund, which the the hail-driven surge in 2025 extreme weather insured losses has sharpened rather than created.
Queensland's affordability position was already the weakest in the country before this dispute. The Australian Consumers Insurance Lobby has argued that redirecting Queensland stamp duty revenue into cyclone resilience measures would do more for premiums than any consumer-facing measure, with chair Tyrone Shandiman describing Queensland as the most unaffordable state for insurance.
Consultation on the new framework continues, with federal Emergency Management Minister Kristy McBain establishing a working group drawing on council representatives from across Australia. The government has said changes will not take effect until further work with states, territories, local governments and communities is complete.
Queensland Premier David Crisafulli said the mid-year budget update was an opportunity to "take it off the table", and framed the campaign as bipartisan at the local level. "Across the board local governments, and that's all mayors of all political persuasions are sending a message," he said.
For the broking market, the practical question is the one the letter poses directly: whether assets that do not get rebuilt to a resilient standard are later presented to underwriters as the same risk. The gap between what communities can fund and what insurers will price has already produced low take-up of fully funded community recovery grants in flood-affected areas, a signal that recovery capacity, not just capital, is constrained.
