NIBA urges insurers to offer premium discounts for flood, bushfire mitigation works

The National Insurance Brokers Association (NIBA) has urged insurers to consider premium discounts for homeowners who have undertaken measures to improve their properties’ resilience against floods, bushfires and other risks.

NIBA says at the moment a number of insurers in northern Australia only “explicitly” recognise cyclone-related mitigation works.

“However this is not extended to other types of risk such as flood or bushfire,” NIBA says in its submission to a Senate inquiry on Australia’s disaster resilience.

“The general insurance industry must play a key role in ensuring that mitigation works carried out by homeowners are recognised by insurers when determining premiums.”

NIBA says it is important that the general insurance industry is engaged to ensure that the types of measures funded by the Disaster Ready Fund will have a positive impact on premiums.

The Federal Government fund will provide up to $1 billion over the next five years from 2023/24 to help communities protect themselves against the impacts of natural hazards across Australia. It replaces the Emergency Response Fund, which terminates on June 30.

NIBA supports the introduction of the Disaster Ready Fund to help communities prepare for natural disasters but says public mitigation works such as those proposed to be funded by the program are only one part of the puzzle.

“For many communities, public mitigation works will have little impact on improving resilience to natural disasters,” the NIBA submission says, citing communities that are regularly impacted by tropical cyclones as an example.

“In these cases, household-level mitigation works, otherwise known as private mitigation are an effective alternative.”

NIBA says the existing Disaster Ready Fund should be expanded to provide grants for homeowners in disaster-prone areas to undertake private mitigation works such as replacing roof materials with non-combustible alternatives and sprinkler system installation for fire defence purposes.

“The increasing frequency and severity of natural disasters has highlighted the need for individuals and communities to take proactive measures to protect themselves and their properties from damage,” the submission says.

“However, the cost of these mitigation works can be prohibitively high for many homeowners and small businesses, leaving them vulnerable to the impacts of severe weather events.”

The Senate Select Committee on Australia’s Disaster Resilience is to present a final report by the last sitting day in September and is taking submissions on an ongoing basis.

Click here for more about the inquiry.