Disaster-prone communities should be added to the National Financial Literacy Strategy’s list of priority audiences, the Insurance Council of Australia (ICA) says.

Homeowners and small business owners are often caught out when disasters strike, leaving them with inadequate coverage to start rebuilding.

Renters also rank high among the uninsured, ICA says in a submission to the Australian Securities and Investments Commission (ASIC).

ASIC is seeking feedback to update the framework of policies, programs and activities to improve financial literacy and capability next year.

“ICA has found that disasters can, unfortunately, expose not only the issue of non-insurance but also underinsurance,” the submission says.

“They may be forced to borrow money, or sacrifice size and features to rebuild their home on a smaller budget. In some cases, they cannot afford to rebuild at all.

“ICA encourages ASIC to partner with other government agencies, community groups and insurers to form a financial capability strategy for communities in high-risk areas.”

It says the regulator’s proposal to extend the strategy’s timeframe to up to 10 years from three may be excessive.

“The pace of change within financial services, including developments in fintech, robo-advice and greater use of apps, may not be fully captured under a 10-year strategy.

“There are bound to be advances in financial services of which we are currently unaware, or have limited knowledge.”

ASIC says a longer timeframe may more appropriately support interventions designed to change attitudes and behaviour.