Australia’s actuaries support risk-based property insurance for natural disasters but are divided on whether there should be premium subsidies for high-risk properties.

The Institute of Actuaries of Australia surveyed 420 of its members on natural disaster insurance and found more than 73% oppose community rating for flood insurance and 53% reject premiums being subsidised for high-risk policyholders.

About one-third believe flood insurance should be made compulsory.

Peter McCarthy, the chairman of the institute’s general insurance practice committee, says the results indicate that actuaries believe compulsory insurance would see low-risk households subsidising the flood-prone.

The institute surveyed members working in general and life insurance, banking, superannuation and wealth management, and Mr McCarthy told insuranceNEWS.com.au that the differing responses show that even professionals who understand the issues have varying views about disaster response.

Some actuaries saw a role for governments to provide a minimum level of insurance for households and businesses.

The survey found 55% believed there is a role for a national insurer to provide a level of disaster coverage, and 58% see a role for a national reinsurer.

Mr McCarthy says 54% of the actuaries thought government compensation payouts should be capped for those without insurance to discourage rebuilding in high-risk areas, while 95% said governments should restrict new development in flood-prone areas or introduce building codes to mitigate flood risk on new properties.

Three-quarters said insurance companies should offer incentives for flood mitigation, and 70% said there should be more investment in data collection such as flood mapping. About 57% said there should be uniform definitions for cover.