‘Cornerstone of our advocacy’: ICA, actuaries demand mitigation

Cornerstone of our advocacy: ICA, actuaries demand mitigation

22 August 2022

Australia’s financial, social and health costs could be slashed by at least $19 billion by 2050 with better investment in resilience to counteract a rise in extreme weather, the Insurance Council of Australia says.

The ICA wants $2 billion spent over five years to better protect Australian homes and communities.

“This is the cornerstone of our advocacy,” ICA CEO Andrew Hall said. “Extreme weather doesn’t have to end in disaster.”

The ICA and the Actuaries Institute are both calling for the funding of more levees, floodways and sea walls, as well as better land use and planning and changes to building codes to allow for the impact of climate change.

They also want state stamp duty and levies – which add $2.1 billion to home insurance annually and make up 21% of premiums nationally – scrapped.

Mr Hall welcomed an independent inquiry requested by the NSW Government into this year’s catastrophic floods which recommended land-use planning reforms and the creation of a new authority to drive mitigation and risk reduction. Inquiry co-leaders Mary O’Kane and Mick Fuller made 28 recommendations.

Last week, a new Finity Consulting report commissioned by the Actuaries Institute said the median premium of a million Australian households categorised as “vulnerable and experiencing extreme home insurance affordability pressure” was equal to 7.4 weeks salary, or 14% of annual gross income.

The actuaries share a plethora of statistics in the report, breaking down the components of home insurance premiums by state, outlining projections under various climate change scenarios, and detailing the cost of insurance for Australia’s 10 million households versus income, and how that affordability is likely to change over time.