NSW election: ICA plots course for a stronger state

Much as it did prior to the federal election last May, the Insurance Council of Australia (ICA) has published a series of demands as NSW residents prepare to head to the polls on March 25.

ICA was pleased with the impact of its work last year, as key messages around mitigation cut through in the wake of massive floods and resulted in real action including $1 billion to be spent across five years.

Now it’s trying a similar approach at state level – believing that any wins achieved in NSW could be replicated elsewhere.

Top of the list is the abolition of the Emergency Services Levy (ESL) – but here’s the full list of “policy recommendations”.

ESL hell

ICA taps into NSW/Victoria rivalry by pointing out that Victorians enjoy significantly cheaper insurance premiums – not least because it abolished its fire services levy in 2013.

NSW is the only mainland state to still have an ESL or equivalent scheme, and residents are much more likely to go uninsured as a result, which in a recently disaster-prone state cannot be good for anyone.

It won’t be easy, but finding “a fairer way” to fund emergency services is a must.

ICA says the next NSW Government needs to “bring the cost of insurance in NSW in line with that in other states by immediately commencing reform of the ESL”.

Land use planning

There have been positive soundbites from the NSW and federal governments affirming that the days of building on floodplains “need to end”, but achieving this in practice could be a lot harder than saying it.

As the climate changes, existing flood zones in NSW are likely to grow, ICA says, and reliance on the one-in-100-year flood risk may no longer be acceptable.

“Adopting a risk-based approach must trigger a re-set on land use planning in NSW,” the document says.

“Any housing development in areas prone to extreme flood risk should not be permitted, and in areas subject to high risk stronger building codes and standards need to be employed and/or adequate resilience infrastructure built.”

Resilience investment

ICA says without increased funding to make NSW homes, businesses, and communities more resilient to extreme weather “the damage bill will become unaffordable”.

It encourages the next NSW government to take advantage of the federal plan to invest $1 billion over five years, and also urges it to expand the build-back and buy-back program in the Northern Rivers to other regions.

The next NSW Government must “extend the Resilient Homes Program beyond the Northern Rivers to other high-risk areas of the state” and “work with the Commonwealth to co-fund resilience programs across the state”.

Building standards

Including the principle of resilience in building standards will lead to stronger homes being designed and constructed, ICA says.

“The principle of resilience must be embedded in the National Construction Code,” it says, and the findings of the Building Confidence report must be swiftly implemented.

Tort reform

Current tort law and civil liability settings should be reviewed to increase insurance affordability and availability, ICA says, as the Australian public liability insurance market continues to harden.

Many SMEs are struggling to afford cover, particularly those in the hospitality, live entertainment, caravan park, amusement park, leisure, and tourism sectors.

“The use of statutorily defined benefit frameworks for personal injury claims (like those used in CTP and workers compensation schemes) should be considered,” ICA says.

“This could provide greater underwriting certainty, reduce claims costs and durations, improve health outcomes for injured people, and increase the affordability and availability of public liability insurance for businesses.”

Better data

Improved and consistent data standards would enable households, communities, government, and agencies to better prepare, protect and respond to disasters.

“The Commonwealth and state and territory governments, including the NSW Government, should work to update, standardise and make publicly available climate hazard data,” ICA says.

Electric vehicles

The next NSW government should ensure homes are EV ready and address skills shortage in EV repair to accelerate the transition to electric vehicles, ICA says.

The government must “collaborate with insurers and relevant industries to develop a path for insuring and encouraging the uptake of EV home charging infrastructure”.

Written off vehicles

ICA says written-off vehicle rules must be reformed to make car insurance sustainable and promote the supply of second-hand vehicles.

It says in most Australian jurisdictions, insurer total loss vehicles that have repairable damage are permitted to be repaired and re-registered.

But this is not the case in NSW, where written-off vehicle rules predominately ban the registration of repairable cars.

ICA says the next government must amend the Road Transport (Vehicle Registration) Regulation 2017 “to permit the repair and registration of total loss vehicles subject to relevant safety and identification checks”.

Government contracts

The next NSW government should remove unfair insurance requirements from government contracts to assist with issues in the professional indemnity market.

“For the engineering and construction sector, these challenges are being exacerbated by onerous, unnecessary and unfair professional indemnity insurance requirements contained within government contacts,” ICA says.

“These require businesses to obtain levels of professional indemnity insurance that are often not available in the market and/or are above what is necessary for the work being undertaken.”

Click here to read the ICA’s election document in full.