The Insurance Council of Australia (ICA), the national body representing Australia’s general insurance industry, has urged a federal parliamentary inquiry to prioritize increasing funding for local governments to improve flood resilience in the face of more severe and more frequent extreme weather.
Submitting its report into the Local Government Funding and Financial Sustainability Inquiry, the ICA said the process provides councils with an opportunity to influence community resilience and insurance affordability, particularly in high-risk areas.
The ICA notes that increasing extreme weather is placing increasing financial pressure on local economies, with councils finding it increasingly difficult to meet preparedness and recovery needs. ICA believes that responding to these pressures will require significant and sustained investment from the federal government.
The ICA outlined a number of priority measures in its submission, emphasizing the need for coordinated action between federal, state and local governments to reduce delays and accelerate investment in flood protection infrastructure. The ICA noted that more than 60 projects in 17 high-risk areas across New South Wales, Queensland and Victoria have been delayed due to approval processes, funding gaps and limited council capacity.
They also recommend expanding the Disaster Resilience Fund into a long-term index program, with a greater emphasis on infrastructure that can significantly reduce flood risks.
Additionally, the ICA called for reform of disaster recovery funding arrangements, noting that improved coordination between government and insurers would support faster recovery funding and more consistent clean-up efforts after major disasters.
The ICA also proposes a 10-year, $30.15 billion flood defense fund, jointly funded by the federal government and the state governments of Queensland, New South Wales and Victoria, targeting 24 priority east coast catchments. The ICA noted that around 1.2 million properties in these areas are at risk of flooding and councils are expected to play a central role in implementing mitigation projects.
The ICA said effective flood protection measures can reduce the flood-related portion of insurance premiums, helping to ease cost pressures on households in high-risk communities. The ICA plans to attend a committee meeting on Friday 1 May and will discuss its recommendations further at a roundtable in St George, Queensland. The ICA has made its full submission public.
ICA deputy chief executive Kylie Macfarlane said: “Local councils are at the frontline of Australia’s worsening natural disaster challenges. They play a key role in land use planning, disaster preparedness and recovery, but the financial, regulatory and resource constraints they face are severe and growing.
“About 242,000 homes in Australia are at the highest risk of flooding, with more than 186,000 of them uninsured, making them among the most vulnerable in our communities. Greater investment in flood defences, better land use planning and a more coordinated approach to disaster recovery will help reduce risk, support councils and ease pressure on insurance premiums over time.”
