Tuesday, 10 December 2024

The Insurance Council of Australia (ICA) has today released the third edition of its award-winning Climate Change Roadmap, outlining the industry’s continued commitment to achieving net-zero.

The 2024 update of the Climate Change Roadmap, Towards a Net-Zero and Resilient Future, includes member survey results which found that 85 per cent of respondents have set net-zero targets by 2050, with 50 per cent aiming for 2030 operational net-zero targets. The survey also found that 63 per cent have linked climate metrics to executive pay.

The roadmap highlights steps the industry has taken to prepare for mandatory climate disclosure requirements that are coming into force nationally for most major Australian businesses in early 2025. More than half of survey respondents have already been subject to these requirements in other jurisdictions.

Examples of member innovation where insurers are incentivising sustainable home renovations and bushfire resilience are also explored. These are not only helping insurers progress their own emissions goals but also helping to mitigate risk and moderate premium costs for customers.

Across the year, the ICA has increased its support to members in this space, including:
• Convening a National Industry Roundtable on land use planning and resilience.
• Developing best practice guides on emissions target setting, transition plans, and nature-positive insurance.
• Expanding focus on global best practices and lessons from other jurisdictions.
• Leading an international delegation to the US, including insurers, elected officials, and department representatives, which examined policy responses to worsening extreme weather.

The Insurance Council advocates on behalf of its members and their customers for policy settings that accelerate Australia’s transition to net-zero.

In 2023, the Climate Change Roadmap won the Sustainability Award at the 27th Asia Insurance Industry Awards, judged by 26 panellists across the insurance industry globally and audited by KPMG.

Quotes attributable to Andrew Hall, CEO Insurance Council of Australia:

The insurance industry is the financial shock absorber of the impacts of extreme weather events, which is expected to cost Australia $35.2 billion a year by 2050.

Extreme weather events are costing Australian homeowners approximately $4 billion a year, highlighting the need for greater action to future proof Australia’s resilience in the face of worsening bushfires, cyclones and floods.

Our members are stepping up to the plate by preparing for climate disclosures and taking action now to reduce emissions.

Each update we make to this important Roadmap will help ensure it reflects current best practice and industry progress.

Wednesday, 4 December 2024

The Insurance Council of Australia (ICA) has welcomed the announcement today by Assistant Treasurer Stephen Jones to enable more Australians to access simple advice about their insurance and help them better protect their assets.

While bespoke advice from qualified financial advisers will continue to be important for many Australians, tranche two of the Government’s Delivering Better Financial Outcomes reforms provides a good opportunity to address unmet demand for financial advice from individuals with less complex financial circumstances.

If implemented carefully, the New Class of Adviser (NCA) creates opportunities for insurers to provide simple advice to customers about their policies, such as choosing the level of cover.

Implications from the reforms will differ depending on insurers’ existing advice models (personal, general or no advice) and business decisions on implementation approaches, once the detail of the changes are known.

The ICA understands a concessional approach to the modernised best interest duty for general insurance is intended to be retained, and the ICA looks forward to working with the Government on this important aspect through the legislative drafting process.

To take full advantage of these reforms, it will be important that the level of qualification for NCAs is appropriate and does not create barriers for insurers to provide simple advice to their customers.

Quotes attributable to ICA CEO Andrew Hall:

The General Insurance Industry has always been supportive of Australians being able to receive the advice they need about the financial services products they need to protect their most important assets.

Insurance products can be complicated and given the systemically important nature of the services we provide, appropriate and targeted advice can lead to better outcomes for consumers.

We are supportive of the Government’s proposed reforms and look forward to working the Government to better understand the implications for general insurance, particularly as relates to the New Class of Adviser.

This is a potentially critical reform as we work through the industry’s response to the Parliamentary Flood Inquiry, and we are keen to ensure that the advice settings are fit for purpose to allow us to continue supporting Australians when they need us most.

Wednesday, 27 October 2024

The Insurance Council of Australia (ICA) today welcomed the Senate Select Committee report on the Impact of Climate Risk on Insurance Premiums and Availability. 

The report highlights how more frequent and intense extreme weather events, driven by climate change, along with the expansion of development into high-risk areas, is widening the insurance protection gap in high-risk parts of the country.  

The ICA supports recommendations which would not only help to drive down premiums, but also reduce emissions, improve community resilience and better protect Australians in the face of worsening extreme weather. 

This includes increasing investment in the Disaster Ready Fund, ending new development in high-risk areas, strengthing our building codes and the abolition of unfair taxes on insurance premiums. 

The cost of extreme weather is growing in real terms. According to ICA’s Insurance Catastrophe Resilience Report 2023–24, insured losses totalled $2.19 billion in 2023-24 across just four significant events.  

Australia’s general insurers are already playing a part in tackling the drivers of climate risk. 

The industry’s Climate Change Roadmap provides a framework for how members can work to subtantially cut emissions this decade across their operations, investments, supply chain and underwriting.  

Over the coming months, the ICA will review and engage with its members on the report’s recommendations.  

The ICA and its members are committed to continuing to work closely with Australian governments, stakeholders, consumer representatives, regulators and experts to mitigate the risks and impacts of climate change on insurance premiums and availability. 

Quotes attributable to Andrew Hall, CEO, Insurance Council of Australia:  

The Senate Select Committee Report adds to the information we have about the correlation between climate risk and insurance affordability and availability. 

As also outlined in the House Economics Committee’s Report into the 2022 floods, there are common policy recommendations for how governments, communities and insurers can work together to improve our resilience to extreme weather risk. 

The ICA and its members thank the Committee for their work inquiring into this important issue. 

We look forward to continuing our collaboration with all levels of government and broader stakeholders. 

Getting the balance right between good customer outcomes without putting further pressure on premiums will be key to successful implementation.