Governments and other stakeholders need to accept that there is no “silver bullet” to solve insurance affordability issues and get on with the hard work of reducing the risk, Insurance Council of Australia (ICA) CEO Andrew Hall says. 

Mr Hall was speaking during a podcast hosted by Munich Re Australia MD Scott Hawkins, during which the pair discuss affordability issues affecting property insurance in parts of the country.

Mr Hall says increasing resilience and better land use planning are key, and was dismissive of other potential solutions that don’t reduce the underlying risk. 

“There’s effectively no silver bullet aside from doing the hard work,” he said. “It’s one of those bits of news that sometimes people don’t want to hear. 

“They think that maybe there is a different way of doing it – we could come up with a government reinsurance scheme or we could pool all those risks into one community owned fund or the like. 

“In nearly every one of these circumstances, ultimately if you haven’t reduced the risk, the cost is still there. Someone is going to have to pay. 

“And really as a country, can we afford to be subsidising everybody’s risks? Or can we be putting that money to better use which is building homes that are more durable in the right location?” 

Mr Hall says governments are increasingly engaging with the industry on the issue. 

“I think a lot of these areas now we are having much more honest discussions,” he said. 

“We are getting government buy-in to what we need to do, and insurers are stepping up and providing the data and the insights that are needed to make the right decisions. 

“We are competing with a global market of capital, and for reinsurance and the like, so we need to put our best foot forward. 

“As a country we need to lean in and try and solve this problem to make sure we remain an attractive place for insurers to operate and for people to get the protection they need.” 

Financial Services Minister Stephen Jones said recently that gathering data will be critical in addressing coverage gaps. 

On the podcast, Mr Hall agrees, and says potential homebuyers need assistance in this area.  

“Ultimately in Australia what we would love to see is some sort of open data source for homebuyers, so that when people are purchasing a property, they can very easily access information around what are the flood risks, what are the cyclone and bushfire risks for that property and make decisions around that purchase. 

“Because ultimately you can guarantee if you’ve got a high risk of something, you are probably going to have trouble getting insurance that you can afford.”