The joint announcement by Assistant Treasurer and Minister for Financial Services, the Hon. Stephen Jones, and Member for Calare, the Hon. Andrew Gee, said the inquiry will take a whole-of-economy view of the ongoing challenges faced by intense and frequent flood events.
“As the announcement correctly points out, the devastating 2022 floods in south-east Queensland and northern New South Wales are the costliest natural disaster for insurers in Australian history, with the Insurance Council of Australia recently estimating the cost to insurers at $5.87 billion,” Ms Saffin said.
Ms Saffin said that in the aftermath of the Northern Rivers floods she had called for the establishment of a flood reinsurance scheme for the Northern Rivers similar to the Northern Australia Cyclone Reinsurance Pool, which is backed by a $10 billion government guarantee.
“Lismore was the epicentre of the Northern Rivers floods and right now we are seeing a situation unfold where a large swathe of South, North, East and Central Lismore residents are receiving letters from their insurers informing them that they are now uninsurable,” she said.
“Not only does this leave homeowners carrying all the risk if something happens to their homes, it also leads onto a situation where their houses will become unsellable, unrentable and cause banks to decide the risk is too great for them and thus foreclose on houses still mortgaged.”
Ms Saffin pointed to the US’s National Flood Insurance Program as another example of a scheme that could be adapted for Australia’s needs.
“This program has many great features including incentivising mitigation and resilience measures by homeowners and local councils to reduce risk in the event of disasters. It offers affordable insurance capped at a certain amount, which then allows the private market to step in and offer affordable ‘top-up’ insurance.
“The need to implement a scheme such as this is urgent and necessary, and the Federal Government is best placed to implement it given they have the ability to raise the necessary revenue needed to fund it.”
In his announcement, Minister Jones said the inquiry will investigate all aspects of the insurance challenge, including the preparedness of insurers to respond to increasingly frequent disasters, supply chain issues, skills and labour shortages, claims handling and communication with policyholders.
Ms Saffin said she supported all aspects of the inquiry but reiterated the paramount need for a national government-backed insurance scheme.
“It would help promote and give certainty to members of the public along with the private sector, it would encourage appropriate mitigation and resilience measures to be taken and would significantly reduce the cost to governments who currently bear the majority of the risk and financial burden of recovery post disasters,” she said.
Thursday 20 July 2023
