Credit: <\/span>Getty<\/cite><\/p>\nThe House of Representatives committee inquiry into insurers\u2019 responses to last year\u2019s east-coast flooding disaster \u2013 the most expensive insurance event in the nation\u2019s history with $7.4 billion in claims \u2013 received 17 submissions including from the nation\u2019s biggest insurers.<\/p>\n
Speaking ahead of an IAG land-planning report to be released on Monday, the insurer\u2019s land planning hazards and regulatory manager Andrew Dyer said houses are being approved in areas under the current planning framework where natural disaster risk levels are unacceptably high.<\/p>\n
\u201cWe\u2019ve got to stop putting more people\u2019s assets in harm\u2019s way, and this is really through land planning reform,\u201d he said. \u201cThat\u2019s where your biggest bang for buck is.\u201d<\/p>\n
For a new $500,000 house in Wilberforce, the flood insurance premium is roughly $3700, or about 3.2 per cent of the area\u2019s median household income, the report says. That does not include other typical charges like non-flood \u201cbase premiums\u201d which can boost the total cost to around $6200 making it unaffordable for many.<\/p>\n
Dyer said current views on \u201cacceptable risk\u201d in land planning don\u2019t adequately factor in natural disasters leaving some communities with \u201creally unacceptable financial outcomes\u201d.<\/p>\n
Other localities lack national guidance for planned relocations, he said.<\/p>\n
\u201cThe risk in some areas is approaching levels where you\u2019re not talking about insurance availability or affordability,\u201d he said. \u201cYou\u2019re really talking about the habitability and viability of these communities. There is no national guidance currently on planned relocation, and we think that\u2019s a bit of black hole.\u201d<\/p>\n
In its submission to the inquiry, Suncorp said Australia\u2019s current built environment is dealing with the consequence of decades of poor planning and more government support and investment is needed for mitigation efforts.<\/p>\n
\u201cIncreasingly, the likelihood is that more properties will only be insurable at a cost beyond the reach of most homeowners,\u201d the company said. \u201cAffordable insurance and the backstop of government have always been there to deal with the consequences. [But] the evolving risk appetite of global reinsurers, combined with the recognition of a changing climate, has rendered this traditional model obsolete.\u201d<\/p>\n
Suncorp said the task was \u201ctoo big for any individual government,\u201d but outlined the benefit of investing in mitigation measures calling out the levies rebuilt by the three levels of government in Tasmania around 2010.<\/p>\n
\u201cWhen Launceston was subject to a major flood in 2016, it was estimated the $55 million upgrade of the levee system avoided economic losses of $216 million,\u201d the group said. \u201cThe Bushfire and Natural Hazards Co-operative Research Centre (CRC) estimates this was a saving four-times the investment in the levees.\u201d<\/p>\n
Suncorp also highlights the need for enhanced building codes and better planning to stop communities from being put at risk, as well as grants for property owners to make dwellings more resilient.<\/p>\n
QBE said insurers\u2019 risk maps, models and tools need to improve for premiums to accurately reflect infrastructure improvements made by communities. \u201cThe Queensland Household Resilience Program is an example of this, and we would welcome a similar approach in other government-funded mitigation programs,\u201d the company said.<\/p>\n
Dyer said while insurers tended to become involved at the end of the lifecycle of an asset such as a home, they could do better by feeding back their insights into the decision-making process of where to build communities. \u201cWhat we\u2019re talking about here is getting involved earlier in the lifecycle of the asset and influencing the risk,\u201d he said.<\/p>\n
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion.<\/i><\/b> Sign up to get it every weekday morning<\/i><\/b>.<\/i><\/b><\/p>\nMost Viewed in Business<\/h2>\nFrom our partners<\/h3>\n
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