12 October 2023

Address to the Insurance Council of Australia Conference


I acknowledge the Gadigal people as traditional custodians of the land we are meeting on.

I pay my respects to their Elders past, present and emerging and extend that respect to all First Nations people attending today.

We all say those words at events like this. On Saturday, we will have an opportunity to make good on them, by giving our First Peoples a place in our Constitution and a Voice to our Parliament.

I am proud to be part of the Government that is taking this question to the people, and I will be proud to vote ‘Yes’ on Saturday.

Thank you to Andrew Hall and the ICA team for pulling together an excellent program for this year’s conference.

The theme of the conference, ‘Insuring Tomorrow Together’, points to the great challenges the insurance industry faces in the years ahead, and the need to act now, not tomorrow.

With insurance - Australians are facing into a perfect storm:

Climate change is no longer a future tense. Natural catastrophes driven by extreme weather events are hitting harder and more often.

Homeowners and commercial property owners have enjoyed a massive run up in property values – that looks good on their balance sheet – but if the house is worth more – it costs more to replace.

On top of all this – because of supply constraints and the war in Ukraine – the cost of repair and replacement has gone up.

These are the drivers of insurance costs and they are skyrocketing.

Last year thousands of Australians opened their home and contents renewal notice and found the price had gone up 30 per cent, some as high as 50 per cent, from the year before.

The biggest rise in two decades, adding to cost of living pressures already bearing down upon them.

It’s tempting to think that we are unique. That we are the only place in the world where this is happening. It isn’t. It is a global phenomena. Premiums are rising - it is getting harder and harder to access insurance at an affordable price.

Global insured losses have doubled in a decade. Reinsurance costs are at a 20-year high. Construction costs keep rising, driven up and up by ongoing global shortages.

Just because it is a global phenomena, it doesn’t mean that we can’t do things to provide targeted relief. I am determined to see Australia do better. The Albanese Government is determined to see Australia do better.

Australia’s first insurance delegation

Last month, I took a delegation of Australian insurers to the UK and Germany, to meet with the big international reinsurers. Everyone in this room understands the role of reinsurance in bringing more capital to the Australian market and spreading Australia’s insured risks into global markets.

You know that the cost of reinsurance can be as much as 30 per cent of the premium paid by a policy holder. So it was important to look them in the eye and have a straight conversation. We talked about insurance availability, about affordability, and what our government is doing to put downward pressure on premiums.

I was surprised that it was the first time an Australian Government has done something like that.

We did it because we wanted to show international reinsurers, and our local insurance industry, and the Australian people, that we are serious.

And we came away with real insights to guide the way forward.

Lessons from Roma

It’s a pretty weird thing sitting in a board room in Munich and listening to European insurance officials talk about a town called Roma - population 7,000 – location Southern Queensland.

I’m pretty sure these guys hadn’t been to Roma but they seemed to know all about the levee built there by the Queensland Government after the 2012 floods.

The initial $28 million cost of the levee has already resulted in savings of over $130 million in avoided damage for the local community. That’s a five-time return on investment in just a few years.

The Roma levee downgraded the flood risk for the town and changed the way insurers and reinsurers assess risk in that area.

Insurers had stopped writing new business in Roma. The levee put it back on the map.

And consumers are the ultimate winners.

The construction of the levee reduced insurance premiums by an average of 34 per cent.

Reinsurers on the other side of the world are talking about Roma. It’s just one small example but it delivers a very big message - when we spend money on targeted, effective mitigation projects, the insurance world notices.

The thing is the Roma levee was first considered in 2005.

But it took devastating floods in 2010, and 2011, and again in 2012 for it to get built. By then $500 million in repair costs had been racked up, and insurers had started leaving town.

We all look around now and wonder where the next Roma levee is. The key lesson is that we can’t wait for a crisis before we build it.

The Government is already acting

The Albanese Government is determined to take these lessons forward.

At the last election, we committed to establish a Hazards Insurance Partnership. It is now about to complete its first year. It is an important collaboration between government and industry to address insurance affordability and availability.

The HIP is key to ensuring that everyone understands where to invest to reduce risk. We are working with the sector to understand how risk reduction reduces insurance costs, and creates savings that can be passed on to consumers.

These measures complement the Disaster Ready Fund, which provides up to $2 billion, co-invested with the states, over 5 years to help our communities improve their disaster readiness.

The need for coordination

This work is important, but it is just the start.

We need to do a lot better at future-proofing our communities. That means more focus on land use planning, infrastructure, and building codes.

Can I make one thing clear – when the global reinsurers hear us talk about our commitment to addressing climate change they mark us up. When they see us taking steps to reduce the risks associated with climate change they mark us up. When they see us make dumb decisions which compound the poor planning decisions of the past all of that work is undone.

Building more new houses in the wrong places with the wrong materials isn’t the answer.

State and local governments have a vital role to play here.

In December 2022, National Cabinet asked state and territory Planning Ministers to develop a national standard for considering disaster and climate risk, as part of land use planning and building reform processes.

There was consensus in the room that day: the era of developing on floodplains needs to end.

These issues are hard enough without us making them even harder.

The role of insurers

There is also a role for insurers in all of this.

Insurers can be quick to reflect risk in pricing. They need to do better to reflect private household mitigation in prices too.

When a family puts bars on their windows to protect their home from theft, they usually see a dividend through cheaper insurance. The same thing should happen when people raise electrical outlets, or elevate their house’s floor to protect it from flood water.

When people put in the work to drive down risk, cheaper insurance is a just reward.

NEMA is reviewing existing efforts across both government and the insurance industry to develop a bank of private mitigation actions that can be taken to reduce the impacts of natural hazards.

This will give us the first consolidation of mitigation activities into a knowledge base which will work towards reducing risk for households and communities.

It’s clear that we need to do a better job of ensuring that both public and private mitigation efforts are being recognised, both by insurers here at home, and reinsurers around the world.

If we do the work, it needs to be recognised and it needs to be rewarded.


Some of these things I’ve talked about today are complicated, and some of them are hard.

If there was one simple thing we could do to drive down insurance prices and relieve the pressure on households, we would do it.

If any of us - the Federal Government, or State and Territory Governments, or Australian insurers, or global reinsurers - could fix this problem on our own, we would do it.

Instead, it will take all of us, and it will take time.

But the insurance industry has a Government that wants to collaborate, and that is willing to advocate to the big reinsurers abroad.

And Australians finally have a Government that is switched on to the problems, that is bringing everyone together to work on solutions, and that is putting them first.