The Insurance Council of Australia (ICA) has proposed a $30.15 billion Flood Defence Fund (FDF) to address the increasing flood risks across Queensland, New South Wales, and Victoria. The fund is the centrepiece of policy recommendations for the next federal government, launched by the ICA today.
The plan, intended for implementation over 10 years, is designed to enhance flood resilience, lower insurance costs and reduce disaster recovery expenses.
The ICA’s policy document, “Advancing Australia’s Resilience,” outlines how the FDF would be structured, with costs shared between the federal and state governments. The proposed funding allocations include:
The proposal follows a series of severe floods, including the February-March 2022 disaster, which resulted in 23 deaths and nearly $6.4 billion in insured losses.
With 1.36 million properties across Australia exposed to flood risks, the ICA argues that proactive investment in resilience measures would be more cost-effective than repeatedly funding post-disaster recovery efforts.
Floods remain Australia’s most expensive natural disaster, affecting thousands of homes and businesses each year.
The ICA estimates that around 298,000 properties – 225,000 homes and 73,000 businesses – face a 2% to 5% chance of flooding annually. Many of these structures do not meet modern resilience standards, increasing their vulnerability to extreme weather.
According to the ICA, worsening disasters – combined with inflation, rising asset values, and supply chain challenges – are driving up insurance costs. The industry body warns that without major investment in risk reduction, insurance premiums could become unaffordable for high-risk communities, leaving more Australians financially exposed.
Beyond the FDF, the ICA has put forward several other recommendations to improve insurance affordability and disaster resilience, including:
The ICA is advocating for a comprehensive approach to disaster mitigation, arguing that reducing exposure to extreme weather will have long-term benefits for homeowners, businesses, and the broader economy.
Calling for government collaboration, ICA CEO Andrew Hall (main picture, above) emphasised that rising premiums are a result of multiple factors, including inflation, regulatory costs and increased climate risks.
“In a cost-of-living crisis, it is important that all our efforts go into measures which will bring downward pressure on premiums, and this can only be achieved through a strong partnership between insurers and governments,” he said.
While long-term flood mitigation is necessary, he also called for immediate regulatory and tax reforms to provide relief for insurance customers in the near term.
“Insurers stand ready to play their part in this important reform, but significant new government investment is the only way to reduce extreme weather risk and must underpin our future collaborative endeavors,” Hall said.
The ICA’s policy document identified 24 flood-prone catchments where targeted investment could reduce risks to life, property, and infrastructure. These locations, spread across Queensland, New South Wales, and Victoria, include major river systems such as the Brisbane River, Hawkesbury River, and Yarra River.
It argues that funding large-scale flood defence projects would help lower long-term insurance costs by reducing the likelihood and severity of disasters. It also supports the creation of a national flood infrastructure register, which would track the condition and effectiveness of existing levees and dams.
The ICA is urging the federal and state governments to prioritise investment in disaster resilience to reduce long-term costs for insurers, taxpayers, and policyholders. Without immediate action, the industry warns that insurance affordability could continue to decline, leaving more Australians without adequate protection.
