The Insurance Council of Australia (ICA) is undertaking consultation to understand how a proposal to raise the wall of Sydney’s Warragamba Dam by 14 metres could impact upstream areas and Indigenous heritage sites.

Located about 65km west of Sydney, Warragamba Dam is one of the largest domestic water supply dams in the world, with a storage lake four times the size of Sydney Harbour.

The wall-raising proposal is intended to reduce flood risk in the city’s northwestern suburbs by allowing temporary holding and then controlled release of floodwaters coming from the catchment area.

Traditional owners have said the project would result in inundatation of Blue Mountains bushland, destroying hundreds of sites of significant cultural heritage, including rock art and sandstone shelters.

ICA has established an Indigenous liaison forum, with the first meeting, to be held early next year. It will consider the outcomes of the dam project to ensure the industry can develop an “informed position” on the wall-raising plan.

CEO Andrew Hall says the insurance sector recognises the need to understand the views and needs of Australia’s First Nations people. The forum will allow insurers to engage with community representatives to allow insurers to gain a greater understanding on important consumer and cultural issues.

“Land councils and other Indigenous organisations have responsibilities for significant community assets, and ensuring their property and people are properly protected is a key priority of insurers,” Mr Hall says.

“Establishing a trusted relationship is key,” he says. “Understanding cultural heritage issues is an important and fundamental step.”

Mr Hall says the insurance industry acknowledges concern in the local Indigenous community over the preservation of the Warragamba catchment. Getting the balance right is “always a complex issue” and ICA needs to work with community representatives and experts to understand all the issues.

The dam, which supplies water to more than 5 million people, took 12 years to build and opened in 1960. In the late 1980s the dam wall was strengthened and raised by five metres.

“The industry’s focus has been on reducing flood risks for communities but it is also critical that insurers understand the planning processes and environmental impact assessments,” Mr Hall said.