A worsening insurance affordability crisis requires a “multifaceted approach”, the chair of a Senate committee inquiry says.

“It’s the cascading impacts of the climate change crisis that require a response from government and industry alike,” Greens senator Mehreen Faruqi told parliament last week. 

“A natural disaster isn’t just a natural disaster; it’s the climate crisis that is exacerbating an insurance crisis, that is then exacerbating the housing crisis. It’s all interconnected. It’s all interrelated.”

The Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability made eight recommendations directed at industry and government, including a national monitoring role for the Australian Competition and Consumer Commission and requiring more transparency from insurers on how premiums are priced.

The report proposes establishing a publicly accessible national disaster risk map and database, increasing the federal Disaster Ready Fund to $400 million a year, and that the government via ministerial councils pushes to end insurance taxes and stop development in high-risk areas.

The five-member committee was divided on recommendations to expand the cyclone reinsurance pool to all natural disasters and for Treasury to develop options for levies on coal and gas companies to fund mitigation and affordability measures.

Liberal senators rejected an expansion of the reinsurance scheme without a “further, comprehensive investigation of the economic and social benefits” of doing so. 

Labor senators added a ninth recommendation targeting strata sector problems, which were also examined during hearings.  

The senators proposed the federal government consider the adequacy of the insurance disclosure regime for strata managers and brokers, while states and territories should review strata scheme governance to ensure practices protect consumers and facilitate transparency and accountability.

The Insurance Council of Australia says it supports recommendations that would not only help drive down premiums but also reduce emissions, improve community resilience and better protect Australians in the face of worsening extreme weather. 

“The Senate select committee report adds to the information we have about the correlation between climate risk and insurance affordability and availability,” CEO Andrew Hall said.

“As also outlined in the House economic committee’s report into the 2022 floods, there are common policy recommendations for how governments, communities and insurers can work together to improve our resilience to extreme weather risk.”

The National Insurance Brokers Association says it is committed to ensuring cover remains affordable and accessible for all Australians. “NIBA looks forward to working closely with the government, industry and other key stakeholders around the relevant recommendations,” it said.