Perrottet puts national reinsurance pool on the table

NSW Premier Dominic Perrottet will ask National Cabinet to consider the feasibility of a reinsurance pool to assist flood-affected areas around the country with insurance affordability and accessibility, building on work to create the Northern Australia cyclone scheme.

Mr Perrottet says insurance has been constantly raised as an issue as he has travelled around flood impacted towns.

“I recognise this is a complex issue, but flood prone communities can’t be left without insurance,” he said in a statement.

“The insurance companies can’t leave these communities behind. I’m putting insurance availability and affordability in high-risk flood areas on the national agenda.”

Mr Perrottet says a national solution is required and all options should be on the table.

“All levels of government need to work together with the insurance industry on innovative products and solutions to solve this problem,” he said.

National Cabinet this month tasked treasurers with considering ways to improve insurance affordability, while planning ministers are looking at developing a national standard to consider disaster and climate risk as part of land use planning reform. Ministers have recognised that “the days of developing on floodplains need to end”.

The cyclone and related flooding reinsurance pool scheme formally began in July, but large insurers have until the end of next year to join, while smaller insurers have been given a further 12 months.

A potential expansion of the pool to other regions was debated in Federal Parliament before the cyclone-focussed legislation was passed early this year, but the wider issue of insurance affordability in catastrophe-prone areas has gained more attention with record-breaking flooding in February and March followed by further disasters.

A Federal Parliamentary Joint Select Committee on Northern Australia held a one-day hearing into the cyclone pool last month to consider ways to improve its operation, amid some disappointment by policyholders over the delayed timing of benefits and the extent of likely savings.

The Insurance Council of Australia has supported National Cabinet’s commitment on land use planning and promotes mitigation as part of a range of measures to address affordability issues.

“Reforming land use planning, strengthening our building codes, investing in household and community resilience, are the only sustainable ways of both reducing risks from extreme weather events and improving insurance affordability,” ICA said earlier this month.

“State treasurers could reduce the cost of insurance right now by reforming stamp duties and taxes on insurance, which in some states add up to 25% to the cost of a premium and only make insurance less affordable.”