Monday, 27 March 2023

The Insurance Council of Australia (ICA) today congratulated the incoming NSW Labor Government on its election victory after a fair policy-driven campaign from both sides. 

During the election campaign, the Insurance Council released ‘A Stronger NSW’, which outlined nine policy recommendations for the next NSW Government to put downward pressure on the cost of insurance. 

The report called on the NSW Government to find a fairer way to fund emergency services and bring NSW in line with every other mainland state and territories in Australia. 

The Emergency Services Levy (ESL) is a tax applied to insurance, adding around 18 per cent to home insurance premiums and up to 40 per cent to business premiums in the State.  

Removing the ESL from insurance would result in a drop in premiums, reducing cost of living pressure on NSW families.  

The urgency of this task is magnified by the growing impact of extreme weather events, which are increasing in frequency and severity because of climate change - an issue highlighted in 2022 in the Northern Rivers and Central West regions of the State.   

To reduce this risk and put downward pressure on insurance costs for households and businesses, the Insurance Council is calling on the new NSW Government to invest in resilience measures such as community infrastructure, improved early warning systems and home retrofit programs. 

The extension of the Resilient Homes Program beyond the Northern Rivers to other high-risk areas of the State would also see communities become more resilient and durable to extreme weather events. 

The Insurance Council also calls on the NSW Government to review land use planning arrangements to prevent the development of homes in high-risk areas. Effective land use planning in areas that are at risk of flood can significantly enhance the resilience of existing and future communities. 

Quotes attributable to ICA CEO Andrew Hall: 

The Insurance Council congratulates the Minns Labor Government on the NSW election win and looks forward to working with the new Government on measures that improve community resilience and put downward pressure on insurance costs for households and businesses.  

In this context, the new NSW Government should act to remove the Emergency Services Levy from insurance premiums and look at alternative solutions for funding, as shown to work in other states and territories.  

At a time when adequate insurance cover is more important than ever, home insurance customers in NSW are paying the most tax in Australia and this is leading to lower levels of insurance when compared to other states.  

Thursday, 16 March 2023

The Insurance Council of Australia (ICA) calls for the Federal Government to continue funding its Disaster Ready Fund (DRF) past the five-year budgeted commitment to better prepare for and protect Australian communities from worsening extreme weather.

The ICA welcomed the establishment in the October Budget of the DRF, which provides up to $200 million annually to be invested in disaster mitigation for five years from next financial year.

However, given the impacts of recent extreme weather events and the ongoing threat of climate change, the Insurance Council is calling for this funding to be extended to a 10-year rolling program.

An ongoing DRF would ensure that Australians receive the benefits of resilience and mitigation investment for years to come, and allow governments and communities to plan for long-term projects that put downward pressure on insurance premiums.

To ensure the funding does not fall short in real terms because of rising inflation, the Insurance Council is also calling on the Government to index DRF funding. A 10-year indexed program would cost the budget about $2.5 billion over the medium term, $1 billion less than the cost of disaster recovery payments and allowances in 2022 alone.

Detailed in the Insurance Council’s pre-budget submission released today are the nine policy areas insurers see as a priority for the Federal Government to put downward pressure on premiums and reduce extreme weather risk for communities, including:

• Finalise the development of a national standard for considering disaster and climate risk in land use planning.
• Funding to support amendments to the National Construction Code to include measures such as standards for resilience in homes and buildings.
• Remove inefficient state taxes on insurance products to improve the availability and affordability of insurance.
• Invest in a robust, national hazards database to better understand risk and how to prepare for it.
• Invest in upskilling tradespeople in the electric vehicle market and support EV charging infrastructure in homes.

The Insurance Council welcomes the opportunity to work with Government through the new Hazards Insurance Partnership and the decision of National Cabinet to task Planning Ministers to develop a national standard for considering disaster and climate risk and Treasurers to consider ways to improve insurance affordability.

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

We don’t have to look far in our past to see the impacts of extreme weather and why there is an urgent need for more investment and collaboration in disaster resilience to better protect Australian communities from worsening extreme weather.

Given the long-term challenges of climate change in Australia, investment in disaster resilience will clearly be required well beyond the five years budgeted for Disaster Ready Fund spending.

The Insurance Council is eager to collaborate with the Commonwealth in the Budget to develop further positive policies to improve the affordability and availability of insurance in a changing climate.