The Federal Government says $600 million will be invested in a new disaster preparation and mitigation program to be managed by a National Recovery and Resilience Agency.

“The new agency will help communities rebuild and recover from natural disasters, helping many Australians in their greatest time of need, while strengthening our defences against future major disasters,” Prime Minister Scott Morrison said today.

“Immediate funding will support resilience projects across the community and for individuals’ homes, such as bushfire and cyclone proofing houses, building levees and improving the resilience of telecommunications and essential supplies.”

The agency will be led by Coordinator-General Shane Stone and bring together the former National Drought and North Queensland Flood Response and Recovery Agency and the National Bushfire Recovery Agency, including the $2 billion National Bushfire Recovery Fund.

The agency will also take responsibility for supporting the long-term recovery of communities rebuilding after recent storms and floods in NSW and Queensland and cyclones in WA.

“Insurers have been calling for some time for this scale of investment, and it’s pleasing to see the Morrison Government has heard these calls with this action,” Insurance Council of Australia CEO Andrew Hall said. “We look forward to seeing the details of these projects in the Federal Budget next week.”

The Government also announced $4.5 million to support disaster recovery scenario training to help regional communities prepare for high-risk assets.

IAG says today’s announcements are a positive step in ensuring the nation has a co-ordinated approach to disaster management and targeted investment in mitigation projects for vulnerable communities.

Insurers yesterday highlighted the importance of increased mitigation spending, while welcoming the Government’s $10 billion guarantee for a new cyclone-targeted reinsurance pool aimed at reducing premiums in Australia’s north.

The Australian Reinsurance Pool Corporation (ARPC), formed to cover terrorism events, will take on cyclone risk from July next year, with details to be hammered out by a Treasury-led taskforce.

“With deep experience running a Government-backed reinsurance pool, ARPC is well positioned to engage with stakeholders in development of the new scheme,” it said.

National Insurance Brokers Association (NIBA) CEO Dallas Booth says pricing structures and fundamental issues around the nature and location of the risks to be covered must be decided and it’s still to be clarified how the guarantee will flow through to provide real benefits for policyholders.

“We will be doing what we can to support the process and to work with Treasury and the ICA to achieve a good result for policyholders in Queensland in particular and northern Australia more broadly,” he told insuranceNEWS.com.au today.

“The pricing has to reflect the risk to a large degree, but it also has to be reasonably manageable in terms of the circumstances of the community, so that is what brokers are looking for, and what NIBA will be working to try and ensure this initiative produces.”

Assistant Treasurer Michael Sukkar says the pool will cover cyclone and related flood damage north of the Tropic of Capricorn, extending across Queensland, NT and WA.

Allianz Chief Corporate Affairs Officer Nicholas Scofield says a cyclone pool, long supported by the insurer, will be very different from a terrorism pool, which covers low frequency, high impact events.

Matters to be considered for the new government-backed model include cover wordings and retention levels for insurers, he says.

“At the high level, it is obviously very much consistent with the mechanism we have been advocating for, but there is an enormous amount to be done in designing exactly how it will work,” he said.

Mr Scofield says having legislative processes and the design phases well advanced in the December half could be important for insurers looking at reinsurance program renewals for next calendar year.

Strata Community Association (SCA) is also seeking a seat at the table as the Treasury-led taskforce thrashes out the pool details.

“Hopefully what it will do is bring more capacity and competition into the northern Australian market,” SCA President Andrew Chambers told insuranceNEWS.com.au.

“Our members are working with these issues, day in day out, so we certainly have a lot of data and information that we can contribute.”