The National Insurance Brokers Association (NIBA) has encouraged insurers to consider premium discounts for homeowners who have taken steps to improve their properties resilience against floods, bushfires and other risks.
NIBA says so far some insurers in northern Australia are only “openly” recognizing storm-related mitigation works.
“However this does not extend to other types of hazards such as floods or bushfires,” NIBA said in its submission to a Senate inquiry into Australia’s disaster resilience.
“The general insurance industry must play an important role in ensuring that mitigation efforts undertaken by homeowners are recognized by insurers when determining premiums.”
NIBA said 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.
Federal Government funding will provide up to $1 billion over the next five years from 2023/24 to help communities protect themselves against the effects of natural hazards across Australia. It replaces the Emergency Response Fund, which will expire on June 30.
NIBA supports the introduction of a Disaster Ready Fund to help communities prepare for natural disasters but says public mitigation activities such as those proposed to be funded by the program are only one piece of the puzzle.
“For many communities, public mitigations will have little impact on improving resilience to natural disasters,” the NIBA submission said, citing communities regularly affected by tropical cyclones as an example. .
“In these cases, mitigation at the household level, otherwise known as private mitigation is an effective alternative.”
NIBA said 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 roofing materials with non-combustible alternative and installation of sprinkler system for fire defense purpose.
“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,” said the submission.
“However, the cost of these mitigation efforts can be prohibitive for many homeowners and small businesses, leaving them vulnerable to the effects of extreme weather events.”
Australia’s Senate Select Committee on Disaster Resilience will present a final report on the last day of the September sitting and continues to take submissions.
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