Australia’s pre-disaster management framework is “inherently incoherent”, a report from KPMG warns.

The report, Risk Apportionment in the Insurance Sector, was commissioned by Suncorp as part of its submission to the Productivity Commission inquiry into natural disaster funding.

Suncorp’s submission calls for significant reform to disaster mitigation policy. It says failure to do so results in up to $1.7 billion of “largely preventable” losses each year.

KPMG says disaster risk apportionment is shared between insurers, governments and households.

But the governments’ role providing post-disaster assistance to stricken communities has become “increasingly significant”, and this is neither sustainable nor effective.

It says the response is ad hoc, ultimately exposing communities and insurers to greater risk.

“The pool of risks associated with natural catastrophes is larger than if mitigation was formally recognised as a significant policy priority,” the report says.

KPMG argues long-term government investment in structured disaster mitigation, rather than post-disaster assistance, makes more economic sense.

“Targeted mitigation programs have been successful in reducing the impacts and costs of natural disasters in communities and seen significant reductions in insurance premiums.”