The Insurance Council of Australia (ICA) is asking governments to use the current review of mutual recognition schemes for workers to ease frictions in trade licensing and address rising repair and claim costs across key insurance lines. In a submission to the National Competition Council on the Mutual Recognition Scheme for Workers, the ICA outlined how differing state-based licensing rules, fuel insecurity, and broader supply chain constraints are shaping the cost and timing of insurance repairs in property and motor portfolios. The ICA, which represents about 85% to 90% of private sector general insurers, said the review is taking place as supply chains come under pressure from geopolitical instability, including the conflict in the Middle East, and as the industry responds to high volumes of claims from extreme weather events.
The council reported that insurers have repaired or rebuilt almost 400,000 homes since 2022 and, in 2024 alone, handled $14.1 billion in motor-related claims. It said higher fuel prices and disrupted trade routes are feeding through to the cost of building materials, parts, and freight, as well as to the availability and price of labour. Industry data cited by the ICA indicates that insurers have seen price increases of up to 36% for building materials, up to 30% for trades and on-site specialists, and up to 50% for freight. According to the council, these factors flow through to the cost of settling claims and, over time, to the premiums paid by policyholders.
The council noted the Australian government’s appointment of a Fuel Supply Taskforce Coordinator and the release of a four-stage national framework – “plan and prepare,” “keeping Australia moving,” “taking targeted action,” and “protecting critical service” – aimed at managing fuel and logistics risks. It said insurers would provide sector-specific risk information to these processes, particularly where they relate to construction and motor repair supply chains.
In its submission, the ICA said that, despite reforms introduced since the COVID-19 pandemic, the existing mix of licensing and mutual recognition rules continues to make the rapid deployment of trades across borders more difficult when demand spikes. The council pointed to Queensland’s absence from the Automatic Mutual Recognition Scheme and to ongoing differences in licensing conditions for occupations such as carpenters, plumbers, and electricians. These variations, it said, can slow the movement of tradespeople when they are required to respond to natural disasters or clear repair backlogs after large events. The ICA supported the continued use of Operator Eligibility Licences for higher‑risk trades – including plumbing, electrical, and structural building work – but said more consistent requirements across jurisdictions would improve labour mobility. It noted that, following major events, insurers often seek to mobilise “surge” workforces from interstate but encounter differing registration and insurance conditions.
One example presented by the council was the divergence in mandatory insurance obligations for electricians. New South Wales does not appear to require insurance as a condition of an electrician’s licence. In Victoria, electricians must hold public liability cover of at least $5 million, and in Queensland they must hold the same minimum level of public liability insurance plus at least $50,000 in consumer protection cover. The council said that state-based differences in licensing, exemptions, and enforcement create a more complex environment for construction businesses that service insurance repairs and may, in its view, reduce the benefits of mutual recognition and emerging national licensing schemes.
The ICA also linked its concerns about workforce mobility to the increasing frequency and severity of extreme weather events and to longer-term housing and infrastructure demand. According to the council, insurers face recurring skills shortages in construction trades, especially in regional areas, and these shortages are most pronounced after major floods, bushfires, and cyclones. It pointed to the 2022 east coast floods, when limited availability of builders, carpenters, electricians, and plumbers extended repair timelines, prolonged temporary accommodation arrangements, and increased claim costs. In this context, the ICA said it supports Automatic Mutual Recognition of qualifications and further harmonisation of interstate licences to speed up the onboarding of interstate and trans‑Tasman workers following disasters.
The council also referred to the National Housing Accord target of 1.2 million homes as an additional source of demand for the same trades that insurers rely on for repair work. It said the target is increasing requirements for carpenters, electricians, plumbers, and bricklayers at the same time as the insurance sector is managing substantial recovery programs. The ICA said housing targets should be set with consideration of local exposure to natural perils and the existing capacity of areas to absorb additional dwellings. In parallel, the council has proposed a $30.15 billion Flood Defence Fund – funded jointly by the Commonwealth and the Queensland, New South Wales, and Victorian governments – to support new flood defences, upgrades to existing properties, managed relocations, and the enhancement of legacy mitigation assets. It said such a program would require a mobile construction workforce capable of moving between regions and projects.
