A new paper by the Australian Strategic Policy Institute (ASPI) calls on the Council of Australian Governments (COAG) to play a role in solving the underinsurance crisis.

The ASPI report recommends an independent COAG study to look at social and government policy initiatives to encourage the take-up of insurance cover.

“Improving existing insurance structures should significantly strengthen resilience,” the report says.

“A COAG-commissioned independent review should consider whether there’s an approach that can improve current outcomes in a more cost-effective manner, specifically by studying the ways that private insurance can strengthen resilience efforts in Australia.”

The report notes the topic has been raised before – particularly by the Victorian Royal Commission into the 2009 bushfire – but argues there has never been a national study of the various insurance models.

It wants government co-contribution and compulsory insurance schemes looked at as well as a catastrophic loss pool funded by a levy through insurance premiums.

It also wants insurance pool schemes and government reinsurance looked at as part of the study.

The ASPI report has also called for the Insurance Council of Australia (ICA) to be made a member of the National Emergency Management Committee (NEMC).

“The insurance sector is an important piece of the resilience agenda, and the NEMC’s key focus is now on resilience,” the report says. “ICA should therefore be included on the NEMC at an appropriate level of representation.”

Other recommendations include encouraging mortgage lenders to insist a property have full insurance coverage against natural hazards; abolishing taxes on insurance as recommended by the Henry Review; and conducting comprehensive landscape assessments to ensure insurance premiums are based on risk.

“We need a new approach to financing the costs of natural disasters and encouraging those living in high-risk areas to be better prepared,” the report says.

“The reality is that all Australian taxpayers will have to bear a share of this cost.”