The Insurance Council of Australia (ICA) has welcomed the Victorian Government's announcement to allocate $517 million across several bushfire risk reduction projects. However, it has issued a warning about “unsustainable” insurance taxes.
The ICA described the projects announced as part of the Victorian Government's budget to improve communication, land management, infrastructure, and bushfire emergency response as positive investments to reduce the future impact of bushfires on property owners and communities.
However, it warned that the projected growth in insurance taxes remains unsustainable, making it difficult for Victorians to take out insurance.
ICA chief executive officer Andrew Hall said the insurance industry has been calling for increased investment in resilience and mitigation measures for over a decade – with the Victorian and Morrison governments responding positively with significant funding as part of the 2021 to 2022 Victorian and Commonwealth budgets.
“Insurers have been calling for some time for this scale of investment in resilience and mitigation measures, and it's pleasing to see the Victorian Government has heard those calls,” Hall said. “More resilient communities, businesses, and households mean less disruption to life and faster recovery after a major natural disaster.”
The Federal Government allocated $1.2 billion over five years to help Australia better prepare for, respond to, and recover from natural disasters. Now, the insurance industry expects the Victorian Government's $517 million investment in bushfire-specific resilience initiatives to protect communities vulnerable to the impact of extreme weather and natural disasters.
While the ICA welcome the investment, the peak body said the news was tempered by Victorian Budget’s projections that revenue from insurance stamp duty will increase by almost one third over the budget estimates, rising 29 per cent from $1.517 billion in 2020-21 to $1.959 billion in 2024-25.
“The effectiveness of this welcome budget measure is tempered by the Treasurer's own projections that stamp duty on insurance will increase by 29% over the forward estimates to almost $2 billion,” Hall said. “Stamp duty on insurance is a retrograde revenue measure that numerous inquiries and reviews have found leads to household underinsurance or non-insurance.
“It's disappointing that not only does this budget fail to reform this problem. In fact, the budget papers show an increasing reliance on insurance stamp duty.”
The ICA is calling on state and territory governments to advance tax reform and remove stamp duty on insurance products to increase insurance affordability for all Australians.
