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Insurers say prescribed burns could help fine-tune premiums

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As Australians await promised new government investment in natural disaster resilience, insurers say bushfire mitigation efforts may help them “fine-tune” premiums.

Treasurer Josh Frydenberg said in his Budget speech earlier this month that further investment in mitigation projects will be announced in the Government’s response to the Royal Commission into National Natural Disaster Arrangements, which is due to deliver its findings on October 28.

The commitment has been well received by the industry, with the Insurance Council of Australia (ICA) saying it supports the adoption of comprehensive bushfire mitigation strategies which can include targeted hazard reduction burns.

“Where hazards have been reduced for an area, the release of updated bushfire risk mapping that shows the reduction in exposure may assist the insurance industry to fine-tune premiums,” spokesman Campbell Fuller told insuranceNEWS.com.au.

ICA says hazard reduction burns can be an effective way of reducing the exposure of properties that are near or on bushfire-prone land.

ICA CEO Andrew Hall says the Federal Government “must take a lead on building a more resilient Australia. A significant investment is required.”

Bushfire and Natural Hazards Co-operative Research Centre CEO Richard Thornton says the centre’s Prescribed Burning Atlas – a new tool to support fire and land management agencies with options for prescribed burning strategies – makes clear there is no ‘one size fits all’ solution to prescribed burning.

“What is suitable for the ACT will not necessarily be best around Hobart,” Mr Thornton told insuranceNEWS.com.au. “There is no universal ‘right’ level of prescribed fire because there are competing objectives to be considered, vastly differing ecosystems to be covered, and constantly shifting variables in demographics and land use.”

He says strategies must be tailored to different environments, and the cost-effectiveness of these different strategies can vary considerably between regions.

The windows for undertaking prescribed burning have also shrunk due to drought and climate change, and Australia’s “fickle” weather system means that periods that are too dry can make it too dangerous to burn, while during periods that are too wet little will burn.

“The complexities around prescribed burning are large and growing,” Mr Thornton says. “The number of people and businesses continues to increase in previously empty forested regions, the impact of smoke on communities causes concerns [and] the management of water catchments is important.”

While fuel reduction burns can decrease bushfire intensity, flame height and the forward rate of spread, Mr Thornton says that on extreme high-temperature and high-wind days the effectiveness of most prescribed burning on stopping runs of large fires is minimal, because medium and long-range spotting will see these areas over-run.

“No amount of prescribed burning can reduce the risk to zero. We will always need to accept some risk.”

IAG has launched a “First Saturday” campaign encouraging Australians to complete small tasks to make their homes safer on at least one weekend a month. It says bushfire risk is complex and there are many factors that affect people’s risk.

“Hazard reduction burns can help to mitigate this risk,” an IAG spokesperson told insuranceNEWS.com.au.”However, other factors should also be considered around how to protect our communities, including where we choose to build homes and the standards to which we build them, as well as how we prepare our homes to reduce risk.”

A Senate committee inquiry into last summer’s bushfires recommends the Commonwealth Government allocate funding from the Emergency Response Fund to each state and territory for the establishment of a dedicated hazard reduction workforce.

It says funding should be sufficient to ensure both hazard reduction and ongoing research activities can be conducted on an annual basis, it said.

The SA Government has already moved to increase prescribed burns by 50%, allocating nearly $100 million for the task.