Insurers are facilitating greater indigenous engagement with the creation of a new liaison forum and a round of consultation to understand how a proposal to raise the wall of Sydney’s Warragamba dam by 14 metres could impact upstream areas and cultural heritage sites.

The Insurance Council of Australia (ICA) acknowledged today that industry regulators and governments have raised specific issues around general insurance for Indigenous communities.

It says it will establish the Indigenous liaison forum in recognition of the importance of balancing community expectations with the key role of insurance in the economy. The forum will directly advise the ICA board.

The first forum meeting will be held early next year and will consider the outcomes of the Warragamba dam feedback to ensure the industry can develop an informed position on the raising proposal, which is intended to reduce flood risk by allowing temporary holding and then controlled release of floodwaters coming from the large catchment area.

Traditional owners have said that would inundate Blue Mountains bushland, destroying hundreds of sites of significant cultural heritage, including rock art and sandstone shelters.

ICA CEO Andrew Hall says the insurance sector recognises the need to understand the views and needs of Australia’s First Nations people. The forum will allow insurers to engage with community representatives to drive better customer outcomes and allow insurers to gain a greater understanding on important consumer and cultural issues.

“Land councils and other Indigenous organisations have responsibilities for significant community assets, and ensuring their property and people are properly protected is a key priority of insurers,” Mr Hall says.

“Establishing a trusted relationship is key. Understanding cultural heritage issues is an important and fundamental step.”

The new forum - to include representatives from insurers and indigenous organisations - will advise the industry on Indigenous-related issues and customer outcomes. It will also support reconciliation actions and increase industry understanding of vulnerable customers and knowledge of specific cultural and heritage concerns.

Mr Hall says the insurance industry acknowledges concern in the local Indigenous community over the preservation of the Warragamba catchment. Getting the balance right is “always a complex issue” and the ICA says it needs to work with both community representatives and experts in the field to understand all issues and correctly form a view.

Located about 65km west of Sydney, Warragamba Dam is one of the largest domestic water supply dams in the world with a storage lake four times the size of Sydney Harbour, holding around 80% of the city’s water.

The dam, which supplies water to more than 5 million people living in Sydney and the lower Blue Mountains, took 12 years to build and opened in 1960. In the late 1980s the dam wall was strengthened and raised by five metres.

“The industry’s focus has been on reducing flood risks for communities but it is also critical that insurers understand the planning processes and environmental impact assessments,” Mr Hall said.