About $50 million from the Emergency Response Fund would be earmarked annually for mitigation works, a move the Insurance Council of Australia (ICA) has called “a leap in the right direction”.

Initially just $150 million – earmarked exclusively for post-disaster recovery – will be available from the fund. The extra $50 million for mitigation was agreed after the Labor Party demanded it as a condition for its support of the fund legislation, which passed the Senate last week.

The extra spending is separate to the $130.5 million the Morrison Government has budgeted for over five years.

Insurers have been lobbying for at least $200 million a year to be spent on mitigation works in the face of increasingly severe and costly natural disasters.

“This is a timely decision, which comes at the start of disaster season,” ICA CEO Rob Whelan said yesterday. “Already many communities have felt the effect of early season bushfires, and the cyclone season is just around the corner.

“We are poised to assist the Commonwealth in developing mitigation action plans and identifying communities where investment in mitigation will have the most impact.”

Suncorp and IAG – the country’s largest personal lines insurers – have both praised the move.

IAG MD Peter Harmer says his company looks forward “to working with [the Government and opposition] to identify opportunities to help make our communities safer and more resilient”.

Suncorp spokesman Joshua Cooney pressed upon the need to target the extra $50 million in high-risk areas such as northern Australia.

“This is a positive step in building our country’s resilience and will help many Australians living in dangerously exposed areas across the country, including North Queensland,” he said.

The $4 billion Emergency Response Fund could rise to $6.6 billion over the next decade, according to the Federal Government.