The National Insurance Brokers Association (NIBA) wants a “whole of nation” approach to natural disaster management, saying insurance is just one part of the solution.

In its submission to the Natural Disaster Insurance Review (NDIR), NIBA says it does not support the NDIR proposal for compulsory flood insurance because it may cause some insurers to exit the market.

It argues that making flood insurance compulsory will increase the cost of insurance for 95% of households while also increasing the risk of underinsurance.

CEO Dallas Booth says there are alternatives to the NDIR’s three stated options – mandatory flood cover on all policies, an opt-out provision for flood risk, and maintaining the status quo.

“NIBA believes there are some very significant measures open to government which do not involve options one or two,” Mr Booth said.

“The real answer is effective mitigation and reliance on insurance for the residual risk.”

He says a combined approach, similar to an agreement reached at the Council of Australian Governments (COAG) meeting earlier this year which proposed a “whole-of-nation resilience based approach to disaster management”, would be the better solution.

This would see all levels of government, business and the community working together.

“NIBA agrees with COAG that if all these sectors work together with a united focus and a shared sense of responsibility to improve disaster resilience, they will be far more effective than the individual efforts of any one sector,” he said.

The association believes the Federal Government should also consider funding a minimum level of flood protection for the small number of households in high-risk areas who cannot get insurance.

“Those consumers in high-risk areas who can obtain flood cover but only at a very high premium could have access to a government subsidy to help them afford the policy,” NIBA said in its submission.

Mr Booth says this would encourage people to take out insurance and lessen the burden on the pubic purse.

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