The insurance industry’s peak bodies have backed the Senate Select Committee’s report into the Impact of Climate Risk on Insurance Premiums and Availability.
In media releases, the Insurance Council of Australia (ICA) and the National Insurance Brokers Association (NIBA) both chose to “welcome” the findings and the report, rather than explicitly support all eight recommendations.
The recommendations include calls for expansion of the Cyclone Reinsurance Pool to cover all natural disasters. Number eight calls for a levy on coal and gas companies to raise funds for disaster resilience measures and to offset the rising cost of insurance.
Insurance Business asked broker Tyrone Shandiman (pictured above), chair of the consumer-focused Australian Consumers Insurance Lobby (ACIL), for his reaction to the recommendations?
“We’re very pleased with the Senate Committee’s recommendations, as they align closely with ACIL’s proposals on tackling insurance affordability,” said Shandiman.
He said expanding the cyclone reinsurance pool, boosting resilience funding, exploring restrictions on high-risk developments and abolishing state-based taxes “are all crucial steps”.
“If these recommendations are fully implemented, they could genuinely transform the affordability and availability of insurance in Australia,” said Shandiman.
ACIL’s chair was particularly supportive of Recommendation 5 that calls for the Cyclone Pool’s expansion.
“While we’ve been vocal critics of the current pool’s execution, we believe in its potential,” said Shandiman. “Think of it like Elon Musk’s early rocket launches – the first attempts were stepping stones to success.”
He said with improvements in modelling and also better integration with mitigation efforts, “the pool can be a powerful tool for addressing extreme affordability challenges.”
Shandiman said ACIL also strongly supports the focus on increased mitigation and resilience.
“At present, a significant portion of government funding allocated to mitigation and resilience is spent on post-disaster recovery efforts, which limits its effectiveness,” he said. “Allocating additional funds toward proactive resilience measures can help reduce claims across insurer portfolios and, in turn, lower premiums for consumers.”
Shandiman said his peak body also backs the report’s call for insurers to contribute funding to mitigation and resilience.
“Incorporating incentives for insurers to invest in these areas through an expanded reinsurance pool is an excellent way to promote shared responsibility and encourage greater mitigation efforts across Australia,” he said.
The recommendation calling for the removal of state-based taxes on insurance also caught the ACIL chair’s attention.
“While state governments are often hesitant to relinquish such a significant revenue stream, this is an essential step to reduce the financial burden on consumers,” he said.
Shandiman said now the ball is in the government’s court.
“We urge them to act decisively to implement these recommendations in full,” he said. “The Senate report offers a clear roadmap to improve affordability and availability for Australians, particularly those in high-risk areas.”
Shandiman said it was important not lose momentum.
“This is an opportunity to address systemic challenges and deliver tangible benefits for consumers,” he said.
The ICA suggested it would rally behind some of the recommendations in the report.
The release specifically mentioned calls for more investment in the Disaster Ready Fund, ending new developments in high-risk areas, strengthening building codes and abolishing “unfair” taxes on insurance premiums.
In its response, NIBA “noted” the report’s analysis and recommendations “aimed at addressing the challenges around insurance affordability.” The release said the Senate report included “important recommendations” to foster resilience.
The Select Committee’s inquiry opened in May and received more than 50 submissions, many from insurance industry stakeholders. The country’s big insurers also gave evidence at the Select Committee’s public hearings.
“Insurance companies should not be taking advantage of the climate crisis to jack up premiums,” said the inquiry’s chair, Senator Mehreen Faruqi. “It’s immoral, it’s unethical, it’s cruel for insurance companies to hike premiums by double digits, while their CEOs walk away with such hefty pay packets.”
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