ICA welcomes NSW budget’s boost to resilience funding

ICA welcomes NSW budget’s boost to resilience funding | Insurance Business Australia

Catastrophe & Flood

ICA welcomes NSW budget’s boost to resilience funding

Efforts to eliminate ESL in the state also commended

Catastrophe & Flood

By
Roxanne Libatique

The Insurance Council of Australia (ICA) has welcomed the New South Wales government’s 2024-25 Budget, noting the significant allocation for resilience efforts as a measure that could improve insurance affordability for communities.

The budget details a $5.7 billion four-year recovery and resilience package. This includes $525 million earmarked for the Resilient Homes Fund, which will be implemented in the Northern Rivers and Central West regions. This initiative aims to lower flood damage risks and enhance safety in these high-risk areas.

Another $87.4 million is allocated to the Resilient Lands Program, focusing on flood recovery and future planning in the Northern Rivers region. This program will also open up new land for development and assist in relocating homeowners from high-risk flood zones.

Budget boosts extreme weather resilience

ICA CEO Andrew Hall commended the government for taking a proactive approach to safeguarding NSW communities from the increasing threat of extreme weather events.

“[The] budget announcements are important investments in the future of New South Wales communities and should improve insurance outcomes in the state,” he said. “By prioritising resilience initiatives, the government is taking a proactive approach to safeguarding lives and property from the increasing threat of extreme weather events.”

NSW insurance losses related to extreme weather events

These resilience and mitigation investments coincide with updated insurance data showing that severe weather events in NSW over the past two years have led to approximately $4 billion in insured losses.

NSW imposes the highest insurance taxes in the country, with customers paying both Stamp Duty and the ESL, resulting in insurance costs that are 20% to 40% higher than in other states and territories.

Budget documents revealed that, without reform, the government is projected to collect more than $12 billion from insurance customers over the forward estimates period, with $5 billion from the ESL and $7.1 billion from stamp duty.

The ongoing ESL reforms are expected to reduce this financial burden on insurance customers and align NSW’s insurance tax structure with those of other mainland states and territories.

“The government’s recommitment to removing the ESL is welcome and will ease the burden on New South Wales insurance customers,” Hall said. “For years, the ESL has unfairly penalised insurance customers in the state, who because of flood risk already pay some of the highest insurance premiums in the country.”