More funding essential for natural disaster prevention, says Suncorp

Suncorp said the ‘chronic shortfall’ in federal funding for disaster mitigation must be addressed.

The Insurance Council of Australia has estimated the insured losses from the summer bushfire period at $2.2bn. Picture: Keith Barnett

Insurance provider Suncorp says greater federal funding and stricter building codes are needed to curb the country’s growing natural disaster risk.

In a submission to a Senate inquiry investigating the Black Summer bushfires, the major insurance underwriter said it believes all levels of government need to reassess the amount of funding set aside for natural disaster prevention.

It also flagged Australia’s building codes and standards need to be reviewed, to better reflect the potential risk for physical damage caused from either bushfires, cyclones, floods or storms.

Suncorp said the “chronic shortfall” in federal funding for disaster mitigation needs to be addressed, as current expenditure is skewed towards recovery management.

“Successive governments have wrongly ignored the imbalance of spending 97 per cent of our disaster funding on recovery, and only 3 per cent on prevention and mitigation,” the company said in its report.

Suncorp Insurance chief executive Gary Dransfield told The Australian that collectively improving the nation’s disaster prevention strategies would lower natural hazard risks.

“Addressing this longstanding imbalance will help to strengthen regional economies, protect vulnerable communities, and put downward pressure on the cost of living via lower insurance premiums,” Mr Dransfield said.

Australia’s bushfire season kicked off in September, when drought-affected parts of Queensland and NSW ignited. By the height of summer, blazes gripped every state in the country.

According to the National Council of Fire and Emergency Services (AFAC), 17 million hectares were burnt, destroying 3094 houses and the loss of 33 lives.

Suncorp said it had received more than 72,000 natural hazard claims since the start of September 2019.

The Insurance Council of Australia has estimated the insured losses from the summer bushfire period at $2.2bn.

In its recommendations, Suncorp noted mitigation funding needs to be increased by $200m a year and matched by state and territory governments.

Mr Dransfield said Suncorp had bought additional reinsurance cover at the end of last year, due to the expected rise in natural disaster claims caused by the bushfires.

“The pricing of our consumer policies considers a number of factors including our assessment of risk for an individual property and the frequency and severity of natural hazards over the long term,” Mr Dransfield said.

“We have been making adjustments to policy prices this year to reflect these higher costs.”

Increase focus on improvements

Commonwealth funding arrangements should also have an increased focus on improving existing infrastructure and assets, in dealing with the increased threat of natural disaster, Suncorp said.

The Senate committee has already received a report from Insurance Australia Group, that said climate change would exacerbate the threat of bushfires and drive up the future price of premiums.

Suncorp in its submission did note that changing climate factors would expose significant parts of Australia to greater natural perils risks.

In particular, places such as southeast Queensland and northern NSW were likely to face a heightened probability of experiencing a cyclone or bushfire.

According to Suncorp, Australian building codes and planning schemes need to better reflect the changing climate conditions.

The insurer noted it often saw the consequences of poor planning and construction across the country, which has prompted it to support a review of the National Construction Code.

“Stronger building codes will assist to improve the resilience of new and renovated building stock, however there is also a need to improve the resilience of existing buildings through retrofitting improvements that strengthen homes against natural hazards,” the company said.

Suncorp has urged state and territory governments to remove the goods and services tax and stamp duty associated with insurance premiums, arguing that it increases the cost and might discourage people from insuring their property.

It said removing such costs would create an overnight saving for customers of between 19 and 21 per cent.