Improve building resilience

Australian homes and businesses should be designed to withstand extreme weather events, both now and into the future. Currently, minimum building standards are designed to preserve life in a catastrophic event – but they are not designed with the goal of preserving the property itself. Research commissioned by McKell by the Insurance Council in 2022 showed that over the previous 10 years, the average annual household cost of extreme weather has been $888, but that this figure is expected to jump to more than $2,500 a year by 2050.

A balance is needed between tackling Australia’s housing shortage and the need to ensure the construction of new homes is streamlined. New homes should not lock in future risk, at the expense of community resilience to worsening disasters.

Insurers have long advocated for the National Construction Code to be amended to require that new homes are built to stronger standards which make them more resilient to the impacts of bushfires, cyclones and floods. This reform could save our economy an estimated $4 billion a year.

Updates to the NCC have been paused until 2029, and so the Insurance Council encourages governments to examine practical measures to enhance the resilience of Australia’s future housing stock, including considering the role of future codes and standards.

Economic benefits from strengthening the NCC

Investing in stronger building standards offers significant economic advantages. Research by the Centre for International Economics for the Insurance Council found that:

1. Strengthening the NCC to require that new homes are made more resilient to extreme weather could save an estimated $4 billion a year.
2. Annual construction costs to improve resilience are estimated at:
   1.  $2 billion for cyclones.
   2.  $1.475 billion for floods.
   3.  $486 million for bushfires.

The need for change

There is growing recognition of the need to strengthen the nation’s building codes. The House of Representatives Standing Committee on Economics inquiry into insurers’ responses to 2022 flood claims recommended that building codes and planning rules be strengthened and future-proofed to improve the resilience of communities and households. The Committee also noted that this should consider not just current flood risks, but also projected increases in risks based on climate modelling.

Recommendations

The Insurance Council of Australia recommends the Federal Government:

• Governments engage with industry, including the insurance industry, to examine practical measures to enhance the resilience of Australia’s future housing stock, including considering the role of future codes and standards.