I’d like to begin by acknowledging the Gadigal people of the Eora Nation as the traditional custodians of the land on which we are meeting, and pay my respects to their Elders past and present.
I’d also like to acknowledge:
- the CEO of the Insurance Council of New Zealand, Kris Faafoi
- Thea Utoft Hoj Jensen, Director General of Insurance Europe
- Catherine Livingstone, Chancellor of the University of Technology Sydney, who delivered a session on Thursday
- ASIC Commissioner Alan Kirkland and APRA Executive Board Member Suzanne Smith
- federal members of parliament Zali Steggall, Susan Templeman and Dan Tehan.
And of course, ICA Chair and Suncorp CEO Steve Johnston, CEO Andrew Hall and his team, insurance companies and their employees and the broader insurance ecosystem.
The recent 3‑day economic reform roundtable highlighted the need for higher productivity growth and possible pathways to this outcome.
Two of the key themes of the discussions were the digitisation of the whole economy and AI – distinct but related developments.
The services economy as a whole, including insurance, is set to be transformed by these developments. Benefits could be wide‑ranging. Digitised back offices should reduce processing costs, putting downward pressure on premiums.
Real‑time granular data should help to expedite responses in general and, in particular, after natural disasters. I’ve already seen this in practice.
Higher quality data and AI processing could improve the identification of vulnerable consumers and in addition more personalised assistance.
Better IT systems will enable better project management and facilitate a ‘tell it once’ single point of engagement systems.
These changes can help overcome the experience of policy holders such as after the 2022 floods where inconsistent decision making, and long delays and disputes over insurance claims compounded the strains of the flood.
But this digital and AI revolution also contains risks that insurers, regulators and governments alike should be aware of.
For example, the flipside of more accurate risk measurement is that it can lead to some being excluded from insurance. This change segues from a broad opportunity to a challenge that is rightly requiring attention.
Insurance affordability is not a uniquely Australian challenge.
Around the world, communities are grappling with the rising cost of coverage, driven by more frequent and severe natural disasters and escalating reinsurance costs.
But here in Australia, the stakes are particularly high.
Just this week, the ICA’s Insurance Catastrophe Report revealed some sobering statistics. Of the 242,000 homes at highest risk of flooding across the country:
- 77 per cent do not have flood cover
- 70 per cent live in areas where the average income is lower than the median.
These are not just numbers, or statistics in a report. This is tens of thousands of families, real people, who are exposed, vulnerable, and often without a safety net.
These are hardworking Australians. People who’ve spent their lives building homes, raising families, contributing to their communities. And yet, with one event, one flood, they could lose everything.
We saw this play out to devastating effect during the 2022 floods.
And earlier this year, I visited Taree after their floods, the media attention was focused on how many in that community didn’t have insurance at all, and what that meant for their future.
That focus matters. Because when insurance becomes unaffordable, it becomes inaccessible. And when it’s inaccessible, it’s not just a financial issue, it’s a social one. It’s about resilience, equity and dignity.
We have a shared responsibility, government, industry, and community to ensure that high‑risk Australians can access affordable, reliable insurance.
The recent trip to Europe was an invaluable opportunity to engage directly with some of the world’s leading insurers and reinsurers, to see what’s happening globally, and how others are tackling these same challenges.
Over the course of the trip, we had the opportunity to meet with representatives from the entire insurance value chain. Reinsurers including Lloyd’s, Munich Re and Swiss Re, brokers including Aon and Marsh, and insurers such as Allianz and Zurich.
We also met with regulators including Flood Re and other experts.
We benefitted from a global perspective on a range of issues.
One message came through loud and clear: global losses of around $100 billion a year are now the norm.
And those losses are being driven by more frequent and more intense weather events, putting extraordinary pressure on reinsurers and, in turn, on local markets and consumers.
And what struck me most was how similar the challenges are.
But also, how well‑placed Australia is to lead.
Because in many ways, Australia’s approach to mitigation is ahead of the curve.
The Albanese government recognises that stopping the worst before it happens puts far less pressure on communities, insurers and the recovery system afterwards.
That is why we have committed to $1 billion over 5 years in disaster resilience through the Disaster Ready Fund to uplift community mitigation and resilience efforts.
That’s $200 million a year that went to projects like warning systems, culverts and retention basins in the first 2 rounds of the program. The third round closed in April.
We have also established the Hazards Insurance Partnership, a collaboration between government and insurers to share data to better understand where to invest to reduce risk and insurance costs.
This partnership is working to develop a shared understanding of natural hazard risk in Australia, identify the most pressing issues and target and test the best policy solutions.
We are also considering how to improve transparency and comparability in insurance products, such as standardising insurance contract definitions of natural hazards.
While the challenges of dealing with natural disasters is shared between countries, the answers to the insurance challenges are not.
It is clear from the discussions overseas that different nations are adopting a wide range of approaches to insurance challenges including price caps, government managed pools and more targeted cross subsidies.
While this means there is not an off‑the‑shelf model we can use, it does let us closely examine – and benefit from – the experience of others to learn the lessons they have learned.
There are also things that the industry is doing.
Agreeing to make the industry code ASIC‑approved and contractually enforceable is an important step. It tells consumers that this isn’t just words on a page. it’s backed by real accountability. That builds confidence, not just in individual businesses, but in the industry as a whole.
This review is an opportunity to make a genuine difference, and going around and meeting with many of the people in this room, I see a real commitment to doing that.
But my message today is this: don’t wait. Don’t wait until the formal review is done, or until the codes are signed off, to start changing your practices.
I know that work is underway in relation to training staff, to improving post disaster communications and upgrading IT systems.
If something is good, if it’s fair, transparent, and puts the customer first, then do it now. Don’t wait for the review to finish.
Because that’s what earns trust.
And that’s what sets this industry up for long‑term success.
Finally, we are working to ensure that the cyclone reinsurance pool is working as well as possible. The pool began operating in 2022 and all eligible insurers were in the pool by the start of this year.
The ACCC’s most recent report showed that it has had an impact on the cost of insurance for those with high cyclone risk.
The pool is also encouraging risk mitigation, with discounts to be provided for actions such as roof and window mitigations on SME properties to be added to the existing incentives for home and strata buildings next year.
However, the ACCC’s most recent report flagged insurers could be doing more to provide incentives for risk mitigation.
Treasury is currently reviewing the operation of the cyclone reinsurance pool. I encourage you to engage with that review if you have views on how the pool could help lower the cost and increase the availability of insurance in northern Australia.
The challenge before us is real.
It is sobering to think that after 2 major catastrophic events earlier this year – Ex‑Tropical Cyclone Alfred in March and the Mid North Coast and Hunter flood in NSW in May – the next high‑risk weather season has just begun.
But as we brace for what might come, there are opportunities ahead.
We have the chance to build a system that’s fairer, stronger and more sustainable. To build one that protects families, strengthens communities and underpins confidence in our economy.
One that doesn’t leave people behind.
That’s the task ahead of all of us.
Thank you for the work you do. Thank you for your partnership. And thank you for your continued commitment to ensuring every Australian can rely on the protection that insurance provides.
Thank you.