Greens urge bold action on climate-driven insurance costs

The Australian Greens have called on the federal government to implement all recommendations from the Senate Select Committee on the Impact of Climate Risk on Insurance Premiums and Availability.

The report, released on Nov. 26, highlighted escalating insurance costs tied to climate-related disasters and included proposals to address affordability and access. 

Tackling climate change and rising insurance premiums

Senator Mehreen Faruqi, who chaired the committee and serves as deputy leader of the Greens, described the report as a crucial step toward tackling the combined pressures of climate change and rising insurance premiums.

“It is clear from this inquiry that insurance has become the latest major stressor for communities as they face the brunt of climate-driven disasters,” she said.

With insurance costs becoming a significant burden for communities facing climate disasters, Faruqi urged the Albanese government to adopt the report’s recommendations.

Boosting disaster resilience and addressing rising insurance premiums

The report proposed eight measures aimed at reducing costs, improving industry transparency, and boosting disaster preparedness through coordinated efforts between governments, insurers, and affected communities. 

The committee’s proposals include the following:

• Establishing a publicly accessible national disaster risk map in collaboration with all levels of government and the insurance industry.
• Mandating insurers to provide policyholders with detailed explanations of premium costs, including how disaster resilience efforts affect pricing.
• Expanding the Cyclone Reinsurance Pool to include all natural disasters, while encouraging insurers to support disaster mitigation initiatives.
• Phasing out general insurance taxes through intergovernmental cooperation.
• Introducing a levy on coal and gas companies to fund disaster mitigation and offset rising insurance premiums. 

Other recommendations focus on increasing federal investment in resilience measures and reviewing land-use policies to reduce future exposure to high-risk areas. 

Government and industry perspectives 

Labor senators on the committee acknowledged the challenges posed by climate-related disasters but pointed to existing initiatives aimed at addressing insurance affordability and resilience. These include the Cyclone Reinsurance Pool and ongoing development of a comprehensive national disaster risk map. 

The Cyclone Reinsurance Pool, backed by $10 billion in government funding, has reportedly reduced premiums for some high-risk policies by an average of 38%. However, Labor senators noted feedback from industry and community groups that the pool’s benefits are uneven and suggested careful evaluation before pursuing any expansion. 

In the broader context, the federal government has also established the Insurance Affordability and Natural Hazards Risk Reduction Taskforce to develop strategies for mitigating disaster impacts and addressing affordability issues across the insurance sector.