A $42.5 million commitment by the Queensland Government to build the East Bundaberg Flood Levee will likely reduce local property premiums by 10-27%.

Insurance Council of Australia (ICA) CEO Andrew Hall says the levee is “long overdue”.

“Bundaberg is notorious for its floods,” he said last week. “Insurers will reassess the risk and lower their premiums for property owners protected by the completed levee.”

Floods in the city in 2013 caused more than $1.1 billion in insured property losses in today’s dollars, and industry data shows more than 10,300 buildings are exposed to flood risks.

Investments in permanent mitigation are vital to ensure the long-term economic and social viability of communities, Mr Hall says.

“Governments should focus on measures that will provide long-lasting change by addressing the underlying cause of insurance affordability issues.”

Suncorp CEO Steve Johnston, who visited Bundaberg earlier this month and met with the local council to discuss the project, says the levee is a critical part of the community’s flood mitigation action plan.

“This project is a win-win,” Mr Johnston said. “We’ve seen how effective investment in economic infrastructure such as flood levees reduces the impact of natural disasters, helps build stronger economies, safer communities and reduces cost of living pressures through lower insurance premiums.”

In 2014 Suncorp lowered premiums in the Queensland town of Roma by an average 45% and by up to 90% when a flood levee was built.

“The equation is simple – when you lower the risk, insurers can lower the premiums,” Mr Johnston said.

ICA says Bundaberg is just one of dozens of Queensland towns and cities where well- designed flood mitigation would reduce flood risk for generations. It says mitigation should be treated as nation-building infrastructure and must take the impact of climate change into account.