The Insurance Council of Australia has today called for the creation of a $30.15 billion flood defence fund to tackle the nation’s “costliest natural disaster”.

It says the fund – part of a detailed set of policy recommendations for the next federal government – is “a big idea to confront a big problem”, as home insurance affordability concerns grow.

The investment would be spread over a decade and split between the federal and NSW, Queensland and Victorian governments. ICA says these jurisdictions have the most flood-exposed properties.

The fund would aim to deliver new flood defence infrastructure ($15 billion), strengthen properties in harm’s way ($5 billion), pay for buybacks ($10 billion) and future-proof existing mitigation infrastructure ($150 million).

ICA, which also calls for a dedicated flood defence minister, says more than half of the 1.36 million properties facing flood risk do not meet modern resilience planning and building standards. 

The Insurance Council’s election platform document says to tackle high premiums, immediate action is needed to back up the longer-term mitigation measures. It calls for the abolition of all state insurance taxes, plus regulatory reform.

“In a cost-of-living crisis, it is important that all our efforts go into measures that will bring downward pressure on premiums, and this can only be achieved through a strong partnership between insurers and governments,” CEO Andrew Hall said.

“Consumers, however, cannot wait for mitigation and risk reduction programs to offer the critical protection and price relief needed. Immediate action is also essential – with tax and regulatory reform offering the best opportunity to ease cost pressure on insurance premiums in the near term.

“Insurers stand ready to play their part in this important reform, but significant new government investment is the only way to reduce extreme weather risk and must underpin our future collaborative endeavours.”

Mr Hall told insuranceNEWS.com.au that while ICA’s document makes no mention of flood pools or subsidies, insurers are discussing such matters with politicians.

But he says it is vital that any intervention is linked to mitigation and has an end date.

“There are many ways we can come at this, but there are a number of key principles that we would use in any discussions with government.

“Whatever intervention is made, in any market, unless it’s linked with mitigation and has a plan to be removed over a period of time, it only ever costs – particularly taxpayers, but also insurance consumers – a lot of money in the long run.

“There are lots of lessons from around the world to be learnt. We think Australia should be able to think about options for itself that work here, and we stand ready to work with government on that.”

While ICA stresses the importance of collaboration, Opposition Leader Peter Dutton recently seemed less keen to share responsibility for insurance affordability issues.

“The onus is on the insurance companies to address this problem,” Mr Dutton said, as reported by insuranceNEWS.com.au. “We’re going to act on it if the insurance companies don’t tidy up this mess.”

Asked if he was disappointed by such rhetoric, Mr Hall said: “It's not surprising that insurance gets raised in the political context.

“But I think what’s important is, there is no silver bullet, and we need to get the facts on the table about what the issues are before we jump to conclusions. We’re prepared to provide all those facts as much as we need to, to highlight what’s going on in the industry. And we’ve made that offer absolutely to the opposition, as we do to the government.”

Most of the points raised in the ICA document have been flagged many times before, including calls for better land use planning and the abolition of insurance taxes.

In November 2023 NSW committed to reforming the emergency services levy, and in 2022 the federal and NSW governments agreed that building on floodplains made “absolutely no sense” and pledged to lead a reform process through national cabinet. Neither has happened yet.

“It does take too long and it is frustrating,” Mr Hall said today. “But unless we keep raising this and speaking to politicians about it, what happens is the events occur, recovery occurs, and then we all go back to normal. Yet everything keeps repeating. It’s the absolute definition of insanity. 

“So yes, we've got to do something about it.”

Click here to read ICA’s election platform document in full.