The Insurance Council of Australia (ICA) has submitted its response to the Productivity Commission’s Interim Report on “Investing in Cheaper, Cleaner Energy and the Net Zero Transformation.”
As the peak body for general insurers, covering about 90% of the private sector market, the ICA’s submission addresses the increasing financial impact of extreme weather and outlines recommendations for strengthening the resilience of Australian homes and communities.
According to the ICA, insurance claims from natural disasters have surged in recent years, with $22.5 billion paid out in the past five years alone. This represents a 67% increase compared to the preceding five-year period.
The council cites research projecting that, without significant risk reduction measures, annual costs could reach $35 billion by 2050, rising at a rate of approximately 5% each year.
A central theme of the ICA’s submission is the need for a national, publicly accessible climate risk information database.
The council points out that existing risk data is often inconsistent and fragmented, making it difficult for stakeholders to make informed decisions.
The ICA supports the creation of a property-level database that would be regularly updated and serve as a foundation for land-use planning, building code reforms, and targeted mitigation investments.
“Access to accurate, granular, and trusted data – integrating both current and projected risks for hazards such as flood, bushfire, cyclone, extreme heat, and coastal inundation – is essential for informed decision-making by households, builders, developers, insurers, and governments,” the submission said.
The council recommends that this database be linked to a national standard for disaster and climate risk, ensuring consistent application across jurisdictions.
The ICA also supports the development of a standardised climate resilience rating system for housing, led by the federal government and informed by both industry and academic research.
The council suggests that a well-designed rating system would provide clear, property-specific information on resilience and guide practical upgrades to reduce risk.
It proposes a self-assessment approach as a starting point, with the option for third-party verification when required for regulatory or insurance purposes.
Some insurers currently offer premium discounts to policyholders who achieve high resilience ratings, and the council sees potential for expanding such incentives.
However, the ICA notes that “systemic reforms and major investment in mitigation – such as community-level flood defences and updates to building codes – will also be essential.”
In its submission, the ICA emphasises the need for a nationally coordinated strategy to enhance the resilience of Australia’s housing stock.
The council has proposed a $30.15 billion, 10-year Flood Defence Fund, to be jointly funded by federal and state governments, targeting high-risk flood catchments. The fund would support new flood infrastructure, property upgrades, voluntary buybacks, and improvements to existing defences.
The ICA also references analysis indicating that updating the National Construction Code to require more resilient new homes could result in annual savings of $4 billion.
It expresses concern over the recent decision to pause regular reviews of the Construction Code, warning that this could delay progress on embedding resilience as a core objective.
The ICA supports assigning the Climate Change Authority a formal role in monitoring and evaluating adaptation policy.
It argues that regular, independent assessments are necessary to ensure accountability and to direct investment toward effective resilience initiatives.
The ICA further recommends that the federal budget include annual reporting on both the costs of natural disasters and the estimated savings from resilience investments.
Additionally, the ICA calls for a review of insurance taxation, noting that state governments collected $7.6 billion in insurance taxes in 2023, compared to $4.6 billion in insurer profits.
The council contends that high insurance taxes can discourage coverage and investment in risk mitigation, and suggests that tax reform could support greater affordability and uptake of resilience measures.
