Assistant Treasurer and Financial Services Minister Stephen Jones has outlined the value of collaborative efforts between governments and insurers to gather risk data, to help address existing gaps in coverage for vulnerable communities.  

Speaking at the 2023 International Congress of Actuaries (ICA 2023) hosted by the Actuaries Institute Australia today, Mr Jones says the recently announced focus from the Hazards Insurance Partnership on providing a nationalised data resource will be critical towards addressing ongoing affordability issues.  

“It is great that insurers are working with the Government through the Hazard Insurance Partnership to address data gaps,” Mr Jones said.  

“All of this work is driven by data. And insurers hold data that that can identify vulnerable communities and high-risk areas.” 

Mr Jones also says the Federal Government has tasked the Australian Climate Service to create an “enduring data asset on insurance affordability, underinsurance, and non-insurance”.   

He says with a collated data set, information to help homeowners reduce natural disaster risk and cost will be available more openly.   

“We want insurers to keep working with us to improve the information we have at hand, and harness that information to target the work we are doing on mitigation and risk reduction with more and more precision,” Mr Jones said.  

But he emphasises that efforts from property owners who do introduce risk mitigation measures must be “recognised in premiums” from insurers.  

“For 12 months, our Government has been saying that it makes little sense to mask the risk of climate change through subsidies for insurance if it encourages building the wrong buildings in the wrong places,” Mr Jones said. “This is just orthodox economics. 

“But the same orthodoxy has to be applied by insurers when they are pricing premiums for communities and households based on the risk that remains when steps are taken to mitigate risk.  

“If they are lumped with the same premium as people who are not taking those steps, then that’s unfair.”  

Mr Jones says it is vital that crucial natural hazard resiliency projects supported by the Disaster Ready Fund, particularly for vulnerable communities, are acknowledged by insurers. 

“Households face difficult decisions between insurance and other expenses,” he said. “We want insurers to respond when improvements are made. 

“This was a major recommendation from the Royal Commission into National Natural Disaster Arrangements, and it just makes sense.”