The Federal Budget has allocated funding to support development of a reinsurance pool for Northern Australia as part of measures to improve cover affordability in the region and has included increased mitigation spending to boost natural disaster resilience.
The budget allocates $2.4 million for Treasury to establish a taskforce to consult on the design and implementation of the reinsurance pool for cyclone and related flood damage, which will be backed by a $10 billion Government guarantee.
The reinsurance scheme due to come into effect in July next year would cover home building and contents, residential strata, residential mixed-use and certain small business property insurance policies in cyclone-prone areas, the Government says.
“The estimated value and range of calls on the guarantee is unquantifiable at this stage of policy development,” Budget papers say. “Further modelling on the potential costs of the guarantee will be undertaken before July 1 2022.”
The budget provides $615.5 million over six years for the previously announced Preparing Australia mitigation program and includes $280 million over three years for projects in bushfire affected areas.
A new Australian Climate Service to improve the ability to anticipate and prepare for more extreme weather events due to a changing climate, and to inform risk reduction and resilience investments has been allocated $209.7 million.
The National Recovery and Resilience Agency, which will oversee the mitigation program and catastrophe responses, will receive $61.1 million over four years and $22.9 million a year ongoing.
A pilot program to fund cyclone risk mitigation works for strata title properties in north Queensland, being implemented with the state government, receives $40.3 million over three years.
The Insurance Council of Australia (ICA) welcomed the spending and called on state and territory governments to match the federal funding in their jurisdictions.
“The Productivity Commission’s estimate that 97 per cent of all disaster funding in Australia is spent after an event, with just three per cent spent on mitigation measures ahead of a disaster, shows that the Federal Government’s commitments are an historic first step towards redressing that imbalance,” ICA CEO Andrew Hall said
The National Insurance Brokers Association says the budget also includes measures such as tax cuts for small businesses, investment incentives, support for regional areas and targeted industry packages that will help insurance clients as well as broking businesses.
