Helping to address rising insurance premiums
Managed by the National Emergency Management Agency, the Hazards Insurance Partnership (HIP) and strategic insurance projects are helping communities be better prepared for disasters.
Natural hazard risk is increasing in many areas of Australia, which is driving up the cost of insurance and creating underinsurance issues. Poor insurance coverage makes it harder for households and communities to fully recover if hit by a natural disaster.
The Government has allocated $22.6 million over four years to a series of initiatives to put downward pressure on insurance premiums and better target mitigation investment to help improve insurance affordability over time.
This foundational work is required to:
- identify the most pressing insurance issues in areas with high natural hazard risk;
- target and test the best policy solutions to reduce risk and insurance costs; and
- support better consumer outcomes via more affordable insurance and a better understanding of insurance products.
These measures build on the Disaster Ready Fund which provides up to $200 million annually to build disaster resilience and migration projects across Australia.
Communities are facing rising insurance premiums due to increasing natural hazards risks. The HIP and strategic insurance projects have a series of initiatives that will enable more targeted investment in disaster risk mitigation, with a goal to put downward pressure on insurance premiums. We will be able to better identify the most pressing insurance issues in areas with high natural hazard risk and test the best policy solutions to reduce risk and insurance costs.
Plan for Disaster Readiness
Hazards Insurance Partnership (HIP)
Natural hazard risk is increasing in many areas of Australia, which is driving up the cost of insurance and creating underinsurance issues. Poor insurance coverage makes it harder for households and communities to fully recover if hit by a disaster.
This HIP is a single touchpoint between the Australian Government and the insurance industry to engage on issues of disaster risk reduction and hazard insurance. The HIP will be used to progress the five streams of insurance work agreed in the October 2022-23 budget.
Meeting One - 2 February 2023
The inaugural meeting of the HIP occurred on 2 February 2023 in Brisbane, with attendees from Government and the insurance industry. Members noted how they were pleased to have a formal mechanism between government and industry to discuss unaffordability and coverage of hazards insurance. Members also affirmed the HIP’s vision to reduce risks for communities through targeted mitigation investment, communication of knowledge needed for mitigation and improved industry advice to Government. A communiqué of the meeting PDF (79.89KB) is now available.
The Terms of Reference PDF (56.7KB) that govern the HIP are agreed to by members.
Meeting Two - 16 March 2023
The Hazards Insurance Partnership (HIP) met for the second time on 16 March 2023. Members endorsed the Terms of Reference PDF (56.7KB). Membership discussed the policy issues that would benefit from Government and industry collaboration through the HIP and confirmed that the HIP would be informed and consulted on the DRF for future rounds. A communiqué of the meeting PDF (63.21KB) is now available.
Meeting Three - 25 May 2023
The HIP met for the third time on 25 May 2023. Members discussed how Australia’s approach to insuring hazard risks compared to our international counterparts. Members also discussed the Second National Action Plan and how the industry could contribute and provide feedback. Members agreed to commence a project to identify high hazard risk areas and mitigations that can be implemented to reduce risk and have a positive impact on insurance affordability and availability. Members discussed the alignment of this project with work being undertaken by the Australian Climate Service (ACS). A communiqué of the meeting PDF (105KB) is now available.
Meeting Four - 6 September 2023
The HIP met for the fourth time on 6 September 2023. Members noted the one-year anniversary of NEMA’s establishment and progress made through the seven months since the first meeting of the HIP. The Australian Climate Service provided an update on work through the Technical Working Group whilst NEMA provided an update from the Mitigation Working Group. Members discussed engagement with the Australia-New Zealand Emergency Management Committee (ANZEMC) and the National Emergency Management Ministers’ Meeting (NEMMM), to ensure relevant issues can be fed from ANZEMC and NEMMM to the HIP, and vice versa. Members were also consulted on the Independent Review of Commonwealth Disaster Funding and Round Two of the Disaster Ready Fund. A communiqué of the meeting PDF (320KB) is now available.
Meeting Five - 7 December 2023
The HIP met virtually for the fifth time on 7 December 2023. Members received updates on the Higher Risk Weather Season and the whole-of-government program of work to address cost of living pressures. The Australian Climate Service (ACS) and the Insurance Council of Australia (ICA) provided an update on the Bundaberg Flood Pilot. Members agreed to progress discussions on the path forward for bilateral data sharing agreements between government and industry. The Australian Prudential Regulation Authority (APRA) and the ICA provided an update on the Climate Vulnerability Assessment. The ICA and Insurers briefed members on the findings from the industry-commissioned report from Deloitte, ‘The new benchmark for catastrophe preparedness in Australia’ PDF (4.53MB). A communique of the meeting PDF (228KB) is now available.
Strategic Insurance Projects
Alongside the Department of the Treasury (Treasury), and the Australian Climate Service (in partnership with the Australian Bureau of Statistics and the Bureau of Meteorology) we are delivering a number of strategic insurance projects to further our understanding of disaster insurance issues, and how to address these. These are:
- Establishing and delivering the HIP;
- Developing a national private mitigation measure knowledge base;
- Exploring options for public-private partnerships;
- Creating an enduring data asset of insurance affordability and underinsurance to inform policy and programs, and;
- Reviewing the standard cover regime and various standard definitions.
Collectively, these projects aim to address core concerns raised by the Government, insurance industry, and the general public surrounding hazard risk and insurance. These are ongoing streams of work, with progress being pursued by Australian Government partners and in collaboration with the insurance industry through the HIP.
We will provide updates on these projects on this page as they develop.
Frequently Asked Questions
- Why is this initiative being undertaken?
- The increasing severity and frequency of disasters across Australia is driving up the cost of insurance.
- It’s getting more difficult for Australian communities to afford adequate insurance.
- This is leading to underinsurance, meaning many households can’t afford to effectively rebuild and recover after disasters.
- The Australian Government wants to ensure that communities are resilient against disasters and are in the best possible position to recover when disaster does occur.
- How will these initiatives address the issues?
- Our insurance work plan will enable better targeted investment in disaster risk mitigation, to put downward pressure on insurance premiums.
- The program of work will support the National Emergency Management Agency to identify the most pressing insurance issues in areas with high natural hazards risk and test the best policy solutions to reduce risk and insurance costs.
- The initiative will foster cooperation between the Australian Government and the insurance sector to address insurance issues driven by natural hazards.
- It will also establish better ways to collect and share information to inform insurance premium decisions.
- What will partnering with industry look like?
- The program has established a forum for cooperation between the Australian Government and the insurance sector by establishing the Hazards Insurance Partnership (HIP), managed by the National Emergency Management Agency, to address insurance issues driven by natural hazards.
- The HIP provides a single touchpoint between government and insurers to address issues at the intersection of insurance and natural hazard risk.
- To drive down insurance premiums, the HIP is progressing a series of projects that seek to enable better targeting of activities to address rising natural hazard risk and work with industry on action to reduce premiums.
- National leadership through NEMA, an ongoing partnership with industry, and sharing of expertise will help to achieve the necessary level of coordination to best allocate resources and responsibility between the public and private sector to solve insurance and natural hazard risk issues.
- We are also pursuing public-private sector partnerships that reduce risk, by leveraging work already undertaken to identify the risk reduction investments that public and private sector can undertake together. This will seek to enhance the value of public investments in risk reduction through private sector co-investment.
- How will data gathering and information sharing be improved?
- We are working with the Australian Climate Service to create a dataset to better understand insurance affordability and underinsurance, which will inform policy and decision making.
- We are also creating a national private mitigation measure knowledge base, to enable more informed decisions on investments to reduce risk. This will allow policy makers and/or individuals to better understand the household-level mitigations that will most likely improve their disaster resilience and reduce risk.