A national approach to affordability problems in flood-prone regions is preferable to localised plans that may face financial risks, the Insurance Council of Australia says.

A group of southwest Queensland councils have asked Marsh’s JLT to consider a mutual option for residents and businesses hit by unaffordable insurance premium rises.

ICA CEO Andrew Hall says it is an issue across many catchments and Australia is one of the few developed economies that does not have a mechanism for pooling flood risk.

“That’s something that the Assistant Treasurer Daniel Mulino acknowledged at the end of last year, and he indicated that he is doing work on that,” Mr Hall told ABC Radio National today.

“I think the solution to this problem is definitely some form of [public-private partnership].” 

ICA has proposed a $30 billion flood defence fund over 10 years to reduce risks, but Mr Hall says “at the same time we’re doing that” there is the question of how to lower premiums in high-risk areas by creating some form of pooling mechanism. 

“I’d be a little bit concerned if ratepayers are funding studies with brokers to try to set up a mutual while at the same time governments probably can step in here and achieve the same outcome,” he said.  

Mr Hall says the industry has provided peril data to the federal government as part of the search for answers to a challenging public policy issue. 

“Really, local government needs to work collectively with state and federal governments on this because it’s going to be a national solution. I really worry about a localised solution that has no diversified risk being very heavily financially exposed.” 

An ICA spokesperson told insuranceNEWS.com au the industry is working with the Queensland Reconstruction Authority and councils to develop ways to reduce insurance costs in the state’s west.

“Premiums across Australia have been under sustained pressure due to the compounding impacts of severe weather events, high inflation and construction costs that have risen 40% since 2020 – far outpacing general inflation,” the spokesperson said. 

Mr Hall says regional cost increases are higher, while mitigation infrastructure in some places, such as Charleville, is still insufficient.

“The frequent nuisance floods, they are protected, but every 20 years, Charleville is at risk of a very serious ... flood. And that’s what the premium is pricing for,” he said.