Brought to you by:

Flood pool, subsidies back on agenda as affordability taskforce announced 

Government intervention measures such as a flood reinsurance pool or direct subsidies are being considered by Insurance Council of Australia members, as efforts to assist with affordability challenges are ramped up.

The Insurance Affordability and Natural Hazard Risk Reduction Taskforce will be established by the Department of the Prime Minister and Cabinet as ICA engages with government to work through the options.

CEO Andrew Hall told that while investment in mitigation, property buybacks and a revised approach to land use planning are critical, in the short term “a partnership arrangement with government” is needed to help homeowners under most pressure.

An Actuaries Institute report released last year estimates 171,000 households face extreme insurance affordability issues, with riverine flood risk accounting for more than half of their premiums.

Mr Hall says the worst-affected residents, where mitigation on the property would make little difference, need help – and the ICA strategy committee has agreed to consider partnership options.

“We are committed to working with government on exploring what those options could be,” he said.

He says ICA members have a range of views but “all are worth exploring”.

"You have, at one end, people advocating for the traditional pool, at the other end, for no intervention. [There are] ideas of subsidies, particular scheme arrangements and the like. 

“But I think the fundamental principles are fairly well agreed. We’ve got to narrow down to the problem we’re trying to fix. We have to make sure that whatever is done doesn’t distort markets, and doesn’t mask the price of risk.”

Mr Hall says there is no timeline on the project “but we are making progress”.

A spokesperson for the Department of the Prime Minister and Cabinet was unable to provide further information on the taskforce prior to publication.

Mr Hall says insurers and government are “focused on exploring ways in which a stable and competitive insurance market delivers for customers, and we look forward to furthering that discussion through this taskforce”.

For in-depth analysis, features and opinion, read Insurance News magazine