While speculation on the date of the federal election continues, at this stage, Treasurer Jim Chalmers is expected to hand down the 2025-26 Federal Budget on March 25. Insurance industry stakeholders, including the Insurance Council of Australia (ICA) and the National Insurance Brokers Association (NIBA), often contribute to this process with a pre-budget submission.
NIBA shared its complete submission with Insurance Business. The document underlines how mitigating natural disasters is increasingly at the front and centre of insurance industry priorities, including the work of brokers.
“NIBA members are at the forefront of helping Australians manage risk, particularly in the face of increasingly severe natural disasters and emerging risks,” said CEO Richard Klipin (pictured above) in the submission. “While insurance provides a vital safety net for Australian communities, it is only one part of the solution.”
The submission calls for three actions: expanding the Disaster Ready Fund, introducing a national co-funded household mitigation scheme and the creation of an advisory committee to address emerging risks.
One major reason for this “critical investment,” according to the peak broker body’s submission, is to alleviate the financial pressures from these disasters that are causing steep increases in insurance premiums.
NIBA is concerned that the government’s Disaster Ready Fund (DRF), which contributes $200 million per year to disaster mitigation efforts, expires in 2029. The end date for current DRF funding is 2028-29.
“To enable communities and governments at all levels to make a meaningful investment in disaster mitigation and resilience projects, NIBA strongly supports transitioning to a rolling ten-year disaster mitigation funding program,” the submission said.
The broker body sees the DRF as “a critical recognition of the need for proactive investments to reduce the impact of natural disasters.”
The submission cited estimates that, in five years’ time, insurance premiums will rise to levels that will make one in 25 homes uninsurable.
“It is vital that action is taken to address the key barriers that contribute to the affordability and accessibility challenges currently faced by Australians,” the submission said.
NIBA would also like more investment at the household level to help make Australia more resilient. The submission noted community level investment and improving building standards but suggested that these are not impactful or affordable enough, particularly in areas regularly impacted by nat cats.
“A national household mitigation scheme would empower homeowners to take proactive steps, such as retrofitting homes for cyclone or fire resistance,” the submission said.
The document said “numerous positive outcomes” would come from the scheme, including reducing the costs associated with nat cats, creating jobs and improving community resilience.
The submission also called for the creation of a government advisory committee to provide guidance on emerging risks and appropriate mitigation measures. Apart from nat cats, NIBA said “Australians are largely unprepared” for emerging risks including artificial intelligence (AI), cyber threats and political unrest. NIBA said this committee should share its information to ensure a coordinated approach across all levels of government.
“Together these measures represent a critical investment in Australia’s future,” said Klipin. “Helping to strengthen household and community resilience, improve insurance affordability and ensure communities and businesses can thrive in the face of growing challenges.”
The Actuaries Institute, another insurance stakeholder, also sent the government its budget priorities. Together with the continuation of “tightly-targeted cost of living relief measures,” climate resilience measures were a top priority for the institute.
“With climate change being one of the greatest challenges and opportunities facing Australia, and recognising our vast access to renewable energy resources and exposure to natural perils, we have an opportunity to lead by example,” the submission said.
The Actuaries Institute said the DRF, National Climate Risk Assessment and National Adaptation Plans “represent a good start,” but warned that, given the exposures, the investment needed to protect public and private assets is “significant.”
For example, the submission said that during the last five years, the annual insured losses due to extreme weather events have averaged $4.5 billion, more than double the 30-year inflation-adjusted average.
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