29 May 2023

Address to the International Congress of Actuaries, Sydney


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.

The Uluru Statement from the Heart is a majestic document and I restate the Government’s commitment to it.

I know there are people here who have travelled from the other side of the world. So welcome. It’s great to have you here. I hope you’re enjoying Sydney, and I hope some of you are hanging around after the conference to see a bit of Australia.

Thank you Naomi [Edwards] for that welcome and thank you to the Actuaries Institute for the invitation to speak today.

The Institute have put together a really good program, from inside the insurance business and from further afield. I also want to congratulate the Actuaries Institute on the recent release of its Green Paper, Not a level playing field: Exploring issues of inequality.

As well as being a good place to come for a conference, Australia is now a very active contributor to the strength of global financial institutions, and to the global response to the challenges that face us all. I’m proud to be part of a Government that is committed to confronting these challenges.

If you believe in evidence‑based policy, then data is the place to start.

And as the world takes on the challenges that face us now, those insights have never been more important.

The challenge

We can’t talk about any of this without talking about climate change.

This Government is making sure Australia does its bit.

We have legislated an emissions reduction target of 43 per cent by 2030, and have committed to net zero by 2050.

These are things we must do for the future, but the impacts of a changing climate are already being felt here at home... bushfires, storms and floods are hitting harder and hitting more often. Changes to long term average conditions are pushing us towards a new normal.

Three and a half years ago, if you were visiting Sydney and wanted to see the great sights, like the Harbour Bridge, the Opera House, and Bondi Beach, landmarks that are storied around the world, you’d have been out of luck.

They were hidden behind a veil of thick smoke.

Months before the first case of the Coronavirus, face masks started to sell out in Sydney shops, as dozens and dozens of fires burning up and down New South Wales covered the city in a foul haze.

That bushfire season took 33 lives, and burned over 17 million hectares around our country, north and south, east and west.

In early 2022, a series of floods in New South Wales and South‑East Queensland became the costliest natural disaster event - for insurance costs - in Australian history.

One of my first visits after becoming a Minister was to the town of Lismore, in the NSW Northern Rivers. A sign on a telephone pole showed the high watermark from the 1974 floods. 12 metres.

At the peak of the 2022 floods that sign was underwater. The water climbed to 14 metres.

In the aftermath, people had nowhere to live.

In Australia, when we talk about the effects of climate change, we no longer use the future tense.

And of course, there is an inequity at the centre of all this.

As we all know, the most exposed communities are in northern Queensland, the Northern Territory, northern NSW and Western Sydney, where there is a greater threat of extreme weather.

And it is low‑income earners who live in areas more likely to be impacted by climate change.

To put it bluntly: when a disaster hits, it’s usually poorer people who suffer the worst of it. They’re the ones who live in valley rather than on the hill, and who cop the heat of the sun without a sea breeze to take the edge off it. In Sydney’s west, a hot day can be a full 10 degrees hotter than it is on the coast.

And they are the same people who struggle to afford mitigation work. And they are the same people who are struggling to afford insurance.

Last year, the Actuaries Institute released a report that found one million households experience insurance vulnerability – that's about 10 per cent of households spending more than 4 weeks of their gross annual income on home insurance.

That same report told us that rates of non‑insurance and under‑insurance are growing, especially in disadvantaged communities.

And, in response to the increased risk, premiums continue to rise. And with that, households face difficult decisions between insurance and other expenses.

So of course, we have to go after the risk. 

A 2014 Productivity Commission review found that the Australian Government’s spending on mitigation was only 3 per cent of what it spent after a disaster.

Three per cent.

It is screamingly obvious that a shift is needed.

The Actuaries Institute tell us that spending on disaster mitigation infrastructure can yield savings of 10 times the initial investment.

A good example is the levy built in Roma in Southwest Queensland following a catastrophic flood in 2012.

The levy cost $28 million. It is already estimated to have produced savings of $130 million for the local community. So we are taking action, to put mitigation and resilience at the centre of our push for cheaper premiums, and safer suburbs and towns.

What we’re doing

The Albanese Government is investing in projects aimed at disaster risk reduction and improving Australia’s disaster readiness.

We know that reducing the risk of damage to homes and businesses is the best way to put downward pressure on insurance premiums, particularly for Australians in disaster‑prone areas.

We know that investment in disaster mitigation infrastructure works.

And we know that the Government and insurers share these challenges, and that neither of us can take them on alone.

The Government will provide up to $200 million a year over the next five years through the Disaster Ready Fund, to help communities improve their disaster readiness.

That’s up to $1 billion invested in our communities.

The Disaster Ready Fund will support projects across Australia, such as levee and drainage system upgrades, bushfire risk reduction projects and more. Investing in these sorts of projects will help to reduce the risk of damage to homes and businesses in the regions they target, and will help to address the underlying risk driving insurance prices.

The Fund is in addition to the Hazards Insurance Partnership, which was established from the October 2022–23 Budget.

It is an enduring partnership between the Australian Government and the insurance industry, managed by the National Emergency Management Agency (NEMA). Through the Partnership, the Government and insurers will work together to build more disaster‑resilience in our communities and drive access to affordable insurance. 

As part of its work, 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.

NEMA has also been tasked with pursuing public‑private partnerships that leverage risk‑reduction investments that the public and private sectors can jointly undertake. NEMA is scoping opportunities for government‑industry partnerships that have the potential to build resilience through strategic investment and planning decisions.

And in addition to all of that, the Australian Reinsurance Pool Corporation has been operating the cyclone reinsurance pool since 1 July 2022. The pool is designed to improve insurance affordability for household, strata and small business property policies in cyclone‑prone regions, mainly located in northern Australia.

The importance of data

All of this work is driven by data.

And insurers hold data that that can identify vulnerable communities and high‑risk areas.

Data on insurance affordability, and availability, and coverage is often limited, and that means that the scope and scale of issues can be hard to grasp, and policy interventions are harder to target.

We have tasked the Australian Climate Service with creating an enduring data asset on insurance affordability, underinsurance, and non‑insurance. This will help address the gaps in understanding insurance affordability.

It is great that insurers are working with the Government through the Hazard Insurance Partnership to address data gaps.

We are collecting data for 2 reasons:

First, it allows us to share information on what works.

But second, it can inform households on the steps they can take to reduce risk and cost.

It is critical that this is recognised in premiums.

For 12 months, our Government has been saying that it makes little sense to mask the risk of climate change through subsidies for insurance if it encourages building the wrong buildings in the wrong places.

This is just orthodox economics.

But the same orthodoxy has to be applied by insurers when they are pricing premiums for communities and households based on the risk that remains when steps are taken to mitigate risk.

If they are lumped with the same premium as people who are not taking those steps, then that’s unfair. Not only is it unfair, but it’s also bad business and bad economics. It sends all the wrong signals.


Through all of that work I have set out above, we are doing our part.

There are 2 key roles for insurers:

First, we want insurers to keep working with us to improve the information we have at hand, and harness that information to target the work we are doing on mitigation and risk reduction with more and more precision.

And second, we want insurers to respond when improvements are made. This was a major recommendation from the Royal Commission into National Natural Disaster Arrangements, and it just makes sense.

When households reduce their risk by making improvements to their home, insurers ought to recognise that in the pricing of premiums. And they ought to tell households in advance about things they can do that will bring their premiums down.

There are big and daunting things that face us.

But together, we can build a safer, more secure, and more resilient country.

Australians expect nothing less.