The federal budget has allocated $3.4 million over four years to develop measures that drive down property insurance costs and reduce unintentional underinsurance, but the government has not delivered a mitigation infrastructure boost.

Measures include $2.4 million over two years for Treasury to consult on and develop options to improve clarity around the basis of home and contents premiums and to legislate standard definitions for natural hazard terms.

Some $1 million is allocated to the Australian Securities and Investments Commission to maintain the north Queensland home insurance comparison website.

“ASIC will meet its costs for this measure through cost recovery. Treasury will partially meet the cost of this measure from within existing resources,” budget papers say.

The budget, delivered last night, has not fulfilled industry hopes for a major mitigation spending increase. The existing Disaster Ready Fund provides $200 million a year of matched funding under a program due to end in 2027-28.

The Insurance Council of Australia says it welcomes a continued focus on protecting people from rising extreme weather costs, but it calls for faster investment in resilience and mitigation.

Related article: An action plan to help high-risk households

“The economic cost of extreme weather in 2025 alone reached $8.6 billion, underscoring the urgent need for an ambitious uplift in funding for extreme weather risk mitigation to protect communities from worsening events,” a spokesperson told insuranceNEWS.com.au.

“ICA continues to call for the Disaster Ready Fund to be scaled into a long-term, fully matched program, and for sustained federal and state co-investment in flood defence infrastructure, home buybacks and home raising.” 

The Actuaries Institute “welcomes the announcement that Treasury will investigate improving insurance affordability and consumer outcomes”.

It says disaster costs are forecast to reach $73 billion by 2060, driven by the changing climate.

“The Actuaries Institute continues to call for a co-ordinated national strategy to encourage a significant step up in public and private investment in resilience measures that better protect homes, infrastructure and communities against climate-related risks,” CEO Elayne Grace said.

The National Insurance Brokers Association says the government is increasing the Australian Prudential Regulation Authority delegated approval threshold for banks and insurers to $10 billion from $5 billion.

"This will allow smaller insurers to achieve economies of scale and secure quicker prudential approvals, fostering competition," it says. "Brokers should monitor for downstream effects on capacity, appetite, and product innovation."

The Alliance of Industry Associations – which includes ICA, the Australian Banking Association, the Business Council of Australia and more than 20 other groups – says the budget offered positive first steps on productivity reform.

Measures include plans to reduce regulatory costs by more than $10 billion a year, streamlining reporting requests from regulators and simplifying climate disclosures.