The insurance industry is crucial in taking the pressure off the public purse when disasters strike and needs to play a larger role in shaping the agenda for the country’s future, Insurance Council of Australia (ICA) President Nick Hawkins says. 

Mr Hawkins says the Reserve Bank of Australia Financial Stability Review released this month called out the danger of more risk shifting from insurers to policyholders and communities. 

“Insurers have been saying for many years that the issues facing us can only be dealt with through collaboration,” he told the ICA Annual Conference in Sydney last week. 

“It’s very important that we work with local, state and federal governments to achieve the best outcomes for our economy.” 

Mr Hawkins says the industry needs to play an even bigger part in shaping the agenda, and be a major contributor to the future success of Australia. 

“Private insurance takes the pressure off the public purse when disasters strike. That’s why we need policy and product settings that encourage greater use of insurance,” he said. 

A recent delegation to Europe that included Assistant Treasurer Stephen Jones and ICA board members heard that in developed countries such as Australia, insurance is estimated to pick up around half the cost of extreme weather events, with governments and the community picking up the rest of the tab. 

Mr Hawkins says the Albanese Government has, through the Hazards Insurance Partnership and the Disaster Ready Fund, put more time and more money into addressing the issues than its predecessors, but the scale of the problem is growing. 

Mr Jones told the conference that the Government is focusing on reducing risk through resilience and mitigation. 

“What we’re doing is just the start. We need to do a lot better at future-proofing our communities. That means more focus on land use planning, on infrastructure, and on building codes,” he said. 

Mr Jones has also called on the industry to better reward people who take actions to reduce their own risk, through measures such as raising electrical outlets, or elevating a floor. 

The National Emergency Management Agency (NEMA) is reviewing existing efforts across both government and the insurance industry to develop a bank of private mitigation actions that can be taken to reduce the impacts of natural hazards. 

“It will give us the first consolidation of mitigation activities into a knowledge base, which will work towards reducing risk for households and for communities,” he said. “We know it can work and we know it can be a powerful input to driving down pressure on household premiums.” 

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