List of recommendations

4.113The Committee recommends the Australian Government define the following terms in the Insurance Contracts Act 1984:

All major forms of water damage, including “rainfall runoff”, “storm surge”, “tidal surge” and “riverine flood”.

Key terms relating to exclusions relating to the maintenance of the property including “wear and tear” and “lack of maintenance”. The Committee recommends that the Insurance Council of Australia accelerate its work with the Australian Competition and Consumer Commission in developing and approving the standardising of these terms and that consumers be provided with greater clarity in relation to the meaning of “pre-existing defect and/or damage”.

4.114The Committee recommends that:

the Australian Government legislate a requirement for general insurers to provide policyholders with information regarding insurers’ expectations of policyholders conducting “reasonable maintenance” to their property and the potential consequences for claim outcomes if a reasonable level of maintenance is not undertaken, and

the Insurance Council of Australia in conjunction with the Australian Securities and Investments Commission and key consumer group representatives develop clear guidance regarding ‘reasonable maintenance’ across insurers, including for roofs, gutters, fences and stumps.

4.115The Committee recommends that a distinction be made in the General Insurance Code of Practice (the Code) between aspects of properties where maintenance is:

Observable (for example, roofs and gutters) versus where it is not observable (for example, typically, stumps).

Where regular upkeep is reasonably within the remit of the householder or business versus where maintenance is infrequent, costly and highly irregular (for example, stumps).

Where maintenance is not observable and infrequent maintenance is required, there should be a presumption of coverage by insurers unless exceptional circumstances can be established. It should be noted that this may have an impact on premiums for some policies (for example, for older houses) but that the trade-off is that it will reduce the likelihood of dramatically different outcomes for households with the same experience from the natural disaster while making no difference to the observed risk or behaviour of policyholders.This presumption should be reflected in the industry-wide guidance issued under Recommendation 2.

4.116The Committee recommends that the Australian Government consider amending Sections 46 and 54 of the Insurance Contracts Act 1984 so as to better give effect to the original intent of the provisions. This could reduce unintended, arbitrary divergences in claims outcomes based on wear and tear and maintenance exclusions at odds with reasonable consumer understanding of their coverage.

4.117The Committee recommends that Engineers Australia in conjunction with the Insurance Council of Australia develop guidelines for hydrologists that are providing insurers with hydrology reports relating to flood and storm claims, with a view to providing a more robust evidence base for insurers to rely on to make claim decisions. These guidelines should be shared with state and territory governments and appropriate authorities such as planning agencies and resilience authorities.

This could include the following matters:

The appropriate qualifications and experience of the hydrologists that are relied upon to provide expert reports.

In order to better use scarce hydrologist resources, the potential for reports to jointly cover multiple properties, particularly where they are co-located and were affected by the same flow of water. Where appropriate, such reports should acknowledge differential considerations across properties.

4.118The Committee recommends that the Australian Securities and Investments Commission produce regulatory guidance clarifying that insurers cannot rely solely on hydrology and expert reports to deny a claim where the report has not properly linked the damage observed with the cause of the damage, consistent with Recommendations 75 - 78 of the Independent Review of the General Insurance Code of Practice (the Code).

That the Code provisions in relation to the appointment of experts be strengthened to ensure that:

the purpose of the Code include the intent that experts are to provide independent, detailed, clear, comprehensible and professional assessments of the cause and extent of loss.

insurers be required to ensure the expertise, professionalism and independence of experts appointed by them.

expert reports are in a standardised format to improve consumer accessibility and understanding.

clauses 161 and 162 of the Code require the insurer to provide policyholders with any expert reports including, but not limited to, any reports that insurers have relied upon to deny a claim in whole or in part.

4.119The Committee recommends the Australian Government establish a mechanism for creating and funding an independent expert panel of hydrologists to undertake hydrology reports if the policyholder disputes the findings of the first report.

One model for such a panel could be the use of medical panels for compensation cases.

Government and industry should explore how such a panel could be funded.

4.120The Committee recommends that the General Insurance Code of Practice be amended to require that insurers implement mechanisms to:

periodically review the evidence relied upon to deny a claim based on lack of coverage under the policy or the application of an exclusion, where a hydrology and other expert report is one component of the evidence, to determine whether reports with insufficient evidence are being given too much weight in the decision to deny the claim

communicate the level of quality expected by insurers to third parties providing expert reports, and

more effectively identify concerns with, and provide feedback to, external experts.

4.171The Committee recommends the Insurance Council of Australia in consultation with the Australian Securities and Investments Commission provide guidance to insurers about providing greater detail and clarity to policyholders on their rights and risks when an offer is made for a final cash settlement, including the risks policyholders should be aware of for the project management of repairs.

This would align with elements of recommendation 71 of the Independent Review of the General Insurance Code of Practice’s Initial Report, and the Committee recommends that this recommendation be implemented in full.

4.172The Committee recommends that the General Insurance Code of Practice provide that final cash settlements:

Be provided in a template form that is standardised across all insurers. The template should include a clear itemisation of all key elements of the total sum. The template be designed with input from peak consumer organisations and the Australian Securities and Investments Commission.

Should include actionable, comprehensive, and transparent quotes.

Should clearly identify compensation for unforeseen risks and project management risk (as identified in Recommendation 9).

4.173The Committee recommends that the General Insurance Code of Practice be amended to include a minimum 30 day ‘cooling off period’ with respect to cash settlements.

4.174The Committee recommends that the General Insurance Code of Practice be amended to require insurers, when offering a final cash settlement, to:

Advise the consumer to obtain legal advice in relation to a final cash settlement;

Advise the consumer of their rights to reopen a final cash settlement under the General Insurance Code of Practice and any rights they may have in respect of common law;

Refer the consumer to community legal advisers and financial counsellors in the local area.

4.175The Committee recommends that the General Insurance Code of Practice be amended to require insurers when offering final cash settlements to include a reasonable uplift/contingency sum to reasonably compensate policyholders for the risks they take on in project managing the repairs to their property.

4.176The Committee recommends the General Insurance Code of Practice be amended to allow policyholders to have a 12-month period to seek a review of a final cash settlement where there is a change in the facts upon which the original determination was made.

4.177The Committee recommends that the General Insurance Code of Practice prohibit the use of the terms “without prejudice” or “confidential” (or other misleading terms) on final cash settlement offers. This could be supplemented by regulatory guidance by the Australian Securities and Investments Commission.

4.178The Committee recommends that a new service be offered to support vulnerable cash settlement recipients to project manage rebuilds and major repairs. This could be similar to the Service Navigator role in Queensland’s Resilient Homes Fund.

4.179The Committee recommends that the Insurance Council of Australia in consultation with the Australian Securities and Investments Commission:

develop standardised industry requirements for obtaining Scopes of Work to ensure common items are included and costings itemised (for example, in a template form),

provide itemised costings in Scopes of Work to policyholders as part of the cash settlement offer process, and

develop standardised mechanisms for insurers to implement quality control over the Scopes of Work they receive.

4.180The Committee recommends that there should be insurer and regulator oversight of Scopes of Work through the following mechanisms:

Stronger Code provisions in relation to quality of Scopes of Work (as per Recommendation 74 of the Independent Review of the General Insurance Code of Practice).

Random vetting of Scopes of Work quality by the Australian Securities and Investments Commission.

4.181The Committee recommends that insurers amend their home insurance policies to provide fully paid temporary accommodation until the insurer has closed the claim, unless the extension of the time required can be demonstrated to be a result of behaviour on the part of the policyholder that is unreasonably causing delay;

That final cash settlements include a provision for temporary accommodation that takes account of the Scope of Works; progress on the project to date; and a reasonable uplift; and

That the cost of covering temporary accommodation should be a separate entitlement and not be funded out of the sum insured amount.

4.182The Committee recommends the Insurance Council of Australia amend the General Insurance Code of Practice to include an appropriate mechanism for ensuring policyholders that are being provided with temporary accommodation as part of their claim have at least 3 months’ notice of any proposed substantive changes to the policyholders’ living situation or the insurers’ payments for the accommodation.

4.208The Committee recommends that the Insurance Council of Australia in conjunction with the Australian Securities and Investments Commission develop guidelines on how insurers can apply tighter internal controls on the oversight of building contractors, including guidelines on community expectations for industry to improve their oversight practices.

4.209The Committee recommends the Australian Government consider appropriate regulatory or other mechanisms to reduce the instances of third-party builders and other contractors making changes to properties without the policyholder’s consent, including the practice of gaining entry, removing property (strip-outs) or conducting repairs without the policyholder’s knowledge or consent. Solutions should take into account the unique circumstances and challenges created by catastrophic flood events.

5.41The Committee recommends that the Australian Government investigate mechanisms to require insurers to more clearly communicate the basis for the price of premiums. This could include:

at a high level, highlighting the nature of risk for the property for each major peril type (for example, a traffic light rating system)

last year’s premium alongside the current year’s premium, along with a descriptive analysis of why there has been a change if it is material (for example, over 10 per cent). The analysis could include highlighting different factors that may influence pricing such as changes in building costs or changes in the assessment of one or more perils, or the impact of household or community level mitigation, without attaching numerical estimates to each factor.

5.42The Committee recommends that the General Insurance Code of Practice be amended to require that insurers, at policy commencement and renewal, communicate key information on the consumer’s policy, including:

A clearly highlighted plain English explanation of common obligations policyholders have under their policies and the application of certain exclusions if they are not undertaken, and

general advice in relation to property maintenance and the expectations of the insurer regarding key aspects of the property such as roofs, gutters and fences, and

general information around the calculation of a policyholder’s sum insured and factors a policyholder may wish to consider to ensure full coverage in a total loss event.

5.43The Committee recommends that the General Insurance Code of Practice be amended to require that insurers inform policyholders when they suspect the policyholder’s sum insured does not cover the full rebuild costs according to their calculations, both at sign-on and renewal. The insurer should encourage the consumer to review their sum insured amount and ask them to confirm with a response.

The Committee further recommends that the General Insurance Code of Practice be strengthened to require insurers to ensure that sum insured calculators are accurate and up to date, consistent with Recommendation 56 of the Independent Review of the General Insurance Code of Practice. The calculators should include updated information on rebuild costs, including cost increases relating to rebuilding to current building standards, and increases in labour and materials costs.

5.44The Committee recommends that the General Insurance Code of Practice be amended to require that insurers adopt a more flexible approach in relation to rebuilds and that, in particular, a like-for-like replacement not be required and that consumers be permitted to swap out size/scope for resilience and efficiency in “sum insured” repairs and rebuilds.

5.45The Committee recommends that insurance brokers and insurers be required to provide clear guidance on the operation of averaging provisions to small and medium sized businesses.

The Australian Government should also consider prohibiting averaging provisions for small businesses.

5.117The Committee recommends that all large insurers commit to having a physical presence at major emergency hubs in affected communities as soon as possible following a natural disaster.

5.118The Committee recommends the Insurance Council of Australia in consultation with the Australian Securities and Investments Commission and state, territory and local governments:

Develop guidance for policyholders on the actions they can take to clean up their properties following a natural disaster.

Include in the guidance any actions policyholders should take to document damage to their properties, such as taking photos to assist with their claim.

Obtain a commitment from insurers that they will have regard for the guidance when assessing claims.

Distribute the guidance as soon as possible to disaster-impacted local government areas.

Make the guidance part of information distributed by insurers when a natural disaster occurs, including making the guidance available at recovery hubs in hard copy form.

Develop debris cleanup guidance for councils.

5.119The Committee recommends that the General Insurance Code of Practice be amended to require that insurers, in the immediate aftermath of a natural disaster, provide policyholders with updated information about:

what policyholders can expect from making a claim and the claims process,

realistic time estimates for each step of the claims process, and

customers’ rights to challenge decisions or raise concerns about the insurers’ conduct.

This guidance should take the form of a comprehensible and standardised diagram or flowchart.

Following major flood events, insurers should also build into their systems pathways for policyholders to receive quick responses to commonly asked questions.

5.120The Committee recommends the General Insurance Code of Practice be amended to require insurers to contact customers within 5 business days of the insurer becoming aware of a material change in the expected timing of any stage outlined in the guidance provided under Recommendation 30.

5.121The Committee recommends, in alignment with recommendation 3 of the 2023 Deloitte report, that insurers be required to build into their staff resourcing plans, strategies to adequately increase resourcing for key services, including call centre and claims management staff, when significant or catastrophic events occur.

5.122The Committee recommends that the General Insurance Code of Practice be amended to require insurers to provide all policyholders with access to real-time information about their claim’s progress and key documentation on their claim. This could be through a mobile application or other platform.

5.123The Committee recommends the General Insurance Code of Practice be amended to require that insurers use the ‘single point of contact’ claims management approach to the extent possible when responding to major natural disasters and ensure policyholders are informed of who their assigned case manager is as soon as practicable.

The Committee further recommends that insurers be required to accommodate the preferred communication channel nominated by a policyholder during the claim processing period.

5.124The Committee recommends that clauses 103c and 103d of the General Insurance Code of Practice be strengthened to ensure that key information is translated and available on insurers’ websites and that clause 103a should specify that this includes translating and interpreting services for Indigenous Australians.

5.125The Committee recommends that insurers invest in their IT systems to improve the storage of policyholders’ key documentation and case notes, including correspondence and discussions. Case managers should also be suitably trained and resourced to implement quality record-keeping.

5.126The Committee recommends that the Australian Securities and Investments Commission review how insurers are identifying vulnerable policyholders with a view to ensuring vulnerable policyholders are:

consistently being identified when they make a claim;

being identified in numbers commensurate with their prevalence; and

provided with appropriate support throughout the claims process.

5.127The Committee recommends that insurers devote additional resources to providing vulnerable customers with assistance. Insurers should evaluate the effectiveness of this assistance after each declared event.

5.128The Committee recommends that the General Insurance Code of Practice be amended to require insurers’ identification of vulnerable customers and training of staff be designed so that customer interaction is compliant with ISO 22458 2022-04, the International Organization for Standardization’s document Consumer vulnerability – Requirements and guidelines for the design and delivery of inclusive service.

5.129The Committee recommends that insurers improve staff training to ensure staff adopt a trauma-informed approach when communicating with policyholders. This should include:

Explicit reference to trauma-informed policies and training in the General Insurance Code of Practice (as per Recommendation 26 of the Independent Review of the General Insurance Code of Practice).

Priority should be given to the recruitment of staff with experience from natural disasters.

Recording, with consent, personal information to better assist people experiencing vulnerability (as per Recommendation 27 of the Independent Review of the General Insurance Code of Practice).

Clear communication, via insurer websites and other forms of communication (such as mobile applications), the types of additional supports that the insurer makes available to consumers experiencing vulnerability.

6.137The Committee recommends that the Australian Securities and Investment Commission update RG 271 Internal Dispute Resolution to provide further guidance on what constitutes a complaint and how complaints should be recorded. The goal should be to ensure that the definition of an internal dispute is set at a level that captures appropriately serious disputes and that this threshold is applied consistently across all insurers.

6.138The Committee recommends that all insurers be required to establish a dedicated internal dispute resolution monitoring and review team to identify systemic issues arising through complaints and implement the Australian Financial Complaints Authority’s feedback to improve internal dispute resolution and claims handling processes.

6.139The Committee recommends that insurers put in place strategies to ensure their internal dispute resolution teams will be appropriately resourced and trained to respond to future significant natural disasters, and able to critically analyse expert reports and investigate the circumstances of the claim.

6.140The Committee recommends that insurers improve their processes to facilitate the escalation of cases that remain unresolved after 12 months to a more experienced case manager.

6.141The Committee recommends that all insurers create a role for a ‘consumer advocate’ which has oversight of and, where appropriate, involvement in, the disputes managed within the firm, cases that have moved to the Australian Financial Complaints Authority (AFCA), and claims which have taken a long period of time to resolve.

The consumer advocate should report to the Chief Executive Officer quarterly and the Board each year and provide a summary of the activities of the office over the preceding 12 months including a summary of cases where the consumer advocate was involved, the disputes that went to AFCA and the firm’s overturn ratio, and where long delays occurred before the case was resolved (longer than 12 months).

7.165The Committee recommends that the Insurance Council of Australia seek to have the General Insurance Code of Practice approved by the Australian Securities and Investments Commission after implementing any recommendations of the Independent Review of the 2020 General Insurance Code of Practice.

7.166The Committee recommends that the General Insurance Code of Practice be incorporated as a contractually enforceable clause in insurance Product Disclosure Statements (as is the Banking Code of Practice).

7.167The Committee recommends that the General Insurance Code Governance Committee publish aggregate data on code breaches by clause, individual insurer, and brand.

7.168The Committee recommends that the Australian Securities and Investments Commission (ASIC) appropriately use powers that it has as a result of the removal of the exemption of claims handling of insurance products under the Corporations Act 2001. The Committee notes that ASIC has only recently been granted such powers and they are as yet untested.

7.169The Committee recommends that the Australian Securities and Investments Commission and the General Insurance Code Governance Committee share data so that it is possible to evaluate breaches of the General Insurance Code of Practice in the context of an insurers’ overall claims profile.

7.170The Committee recommends that the Australian Securities and Investments Commission develop and define key outcomes measures for the consumer experience, including:

Communication (outcome measures)

oOverall customer satisfaction, such as a customer satisfaction score

oConsumer comprehension of communications (random sample)

Claims processing

oAverage time taken to respond to a customer after first making an enquiry or initiating a claim

Vulnerable customers

oProportion of customers identified as vulnerable (BAU, quarterly)

oProportion of customers identified as vulnerable (designated events, monthly)

Internal dispute resolution

oProportion of total cases that involved internal dispute resolution

oAverage time taken to resolve internal dispute cases

External dispute resolution

oProportion of total cases that were referred to the Australian Financial Complaints Authority

oSuccess rate at the Australian Financial Complaints Authority

Cash settlements

oProportion of resolved cases that are final cash settlements

Claims acceptance rates

oPercentage of claims accepted

oPercentage of claims closed (at key points in time, for example 6months, 12 months, 18 months)

General Insurance Code of Practice Compliance

oBreaches of the General Insurance Code of Practice per thousand claims by clause, insurer, and brand.

7.171The Committee recommends that legislation provide the Australian Securities and Investments Commission with sufficient data-gathering powers to obtain the information required to monitor and report on the metrics recommended in Recommendation 51.

7.172The Committee recommends the Australian Securities and Investments Commission consider seeking data from insurers on their performance based on the metrics recommended in Recommendation 51:

Quarterly, for business-as-usual operations

Monthly, for each declared event.

7.173The Committee recommends the Australian Securities and Investments Commission publish quarterly insurer and brand level data on their performance on the metrics recommended in Recommendation 51.

7.174The Committee recommends that the Australian Securities and Investments Commission’s MoneySmart life insurance claims comparison tool be extended to general insurance.

7.175The Committee recommends that for each declared event, insurers be required to report the number of unresolved cases after 12 months to the Australian Securities and Investments Commission and the overarching strategy for resolving these cases. This report should include the total number of outstanding claims and the most common reasons for the delay.

7.176The Committee recommends that the General Insurance Code of Practice (the Code) be reformed to implement Recommendation 63 of the Independent Review of the 2020 General Insurance Code of Practice, that is: where the insurer has not made a decision on a claim within 12 months, and the delay is not due to the consumer or other reasons beyond the control of the insurer, the Code should require the claim to be accepted.

The Committee further recommends that Australian Securities and Investments Commission consider using its powers in relation to claims management to enforce this obligation.

This would not be triggered where a claim has been lodged with the Australian Financial Complaints Authority.

This would be triggered where internal dispute resolution has commenced but is not resolved. If the insurer has not made a decision by 12 months, the claim must be paid.

7.177The Committee recommends that insurers report case management key performance indicators to the Australian Securities and Investments Commission.

7.178The Committee recommends that insurers recognise standard third-party authorisation forms and that this obligation be reflected in staff training.

7.179The Committee recommends that, if a policy renewal falls due when there is long delay in claim handling or the completion of the project, the insurer should:

be required to offer a reduced form of cover, with an appropriately lower premium

this cover should include public liability cover and sufficient cover for the building in its damaged state (noting that some consumers are being sent standard premium renewals, which amounts to excessive cover).

7.180The Committee recommends that insurers be required to ensure that people paying premiums monthly do not pay more.

8.63The Committee recommends that the Australian Government work with state and territory governments to ensure flood maps are produced to a high standard across the nation, regardless of the size of the local government area producing the modelling. This may require:

increased funding for local government areas and water authorities, and

the development of agreed standards to ensure that flood mapping is completed to at least an agreed minimum standard.

That, over time, this higher quality flood modelling be made freely accessible to homeowners and the general public along with easy to understand information about flood risk exposures at each property. This may be best undertaken in the first instance by local councils and/or water authorities responsible for generating the flood modelling, consistent with Recommendation 3 of the Actuaries Institute’s Funding for Flood Costs report (August 2023).

8.64The Committee recommends that the Australian Government ultimately move towards a national, centralised, public-facing portal containing flood risk data at the household level for:

all households and small businesses across Australia, and

all land being considered for release for development and all land that has been released for development, but not yet developed.

Agencies tasked with developing the portal should reflect upon governments’ past efforts to develop similar portals and lessons learnt. The portal should be easily accessible, user friendly and display high-quality flood risk information in a way that is readily understandable to communities.

That before data is released on such a portal for existing properties (residential and small business), that the entity creating the flood study release that data through a staged process involving appropriate community consultation and engagement.

8.65The Committee recommends that the Australian Government commission research into effective ways of communicating flood risk to communities. The research may explore communities’ understanding of the Average Recurrence Interval, categories such as High, Medium or Low flood risk, and the Annual Exceedance Probability percentage. The research should be used to establish standard best-practice communication strategies for local governments and other stakeholders in communicating flood risk to communities.

8.66The Committee recommends that the Australian Government continue to work with the insurance industry through the Hazards Insurance Partnership to collate:

data contained in the National Flood Information Database, and

household-level data held by insurers (de-identified where appropriate).

8.122The Committee recommends that the Australian Government continue to work with the states and territories through National Cabinet to ensure that disaster and resilience funding, and non-financial support, are accessible and adequate for all councils, particularly smaller councils.

The Committee recommends that the Government work with the states and territories through National Cabinet to ensure more disaster support can be triggered at the sub-Local Government Area level when needed.

8.171The Committee recommends a more flexible approach to post-flood grant arrangements, to expand eligibility to include some insured people, including:

The Australian and state governments, in consultation with local governments and the insurance industry, make design, implementation and communication improvements to recovery programs to avoid future delays due to unanticipated or poorly managed interactions with insurance claims processes.

The Australian and state governments review eligibility criteria for recovery programs, including grants, to ensure they are fit for purpose. This should include consideration of extending support currently restricted to uninsured people to include some insured people, where justified by local and individual circumstances.

The Australian Government investigate the advantages and risks of enabling access to the Home Equity Access Scheme for resilience improvements by people who cannot access or afford flood cover.

8.172The Committee recommends that all levels of government should work together to ensure that, as far as is possible, people don’t need to resubmit the same information multiple times for different disaster support. Just as insurers should aim for one point of contact, government should aim for ‘tell your story once’.

8.207The Committee acknowledges the increased funding for the community legal sector recently announced. While the focus of this funding will be for family violence services, the Committee recommends that an appropriate proportion be dedicated to natural disaster services.

9.259The Committee recommends the Australian Government consider measures to improve the affordability of flood insurance for existing policyholders with high flood risk properties, including the appropriateness of a government supported reinsurance arrangement.

Any interventions to improve the affordability of flood insurance should be pursued in accordance with to the following interdependent principles:

oAffordable cover for even high-risk properties. Flood insurance should be available to all Australian homeowners and body corporate lot owners at an affordable price, but with conditions.

oPrice signals. Any assistance to affordable insurance should not compromise price signals against full cost of risk. This could be achieved by partial (but not full) reduction of the premium and/or a gradual phasing out of some assistance.

oCross-subsidies. Any scheme of reinsurance support or subsidies should minimise cross-subsidisation through premiums where possible as this could raise issues of fairness (for example, low-income households cross-subsiding higher risk high-income households) and could be economically inefficient in that it may create a disincentive to insure.

oPhase-out. That any scheme involving public funding being devoted to a reinsurance pool or subsidies, should be phased out over time in line with ongoing investment in community and household mitigation to reduce the underlying risk over time.

oThe underlying risk: no new developments. Governments at all three levels should commit to arrangements (including more public disclosure) to ensure that no new developments occur in high-risk areas.

oThe underlying risk: community mitigation. Federal and State governments should commit to ongoing investment in community mitigation. This should include a guaranteed minimum annual investment level and the development of rigorous business cases.

oThe underlying risk: household mitigation. Households and small business should be provided with information on mitigation options and their premiums should be reduced immediately when they undertake such mitigation.

9.260The Committee recommends that the Australian Government work with State, Territory and local government through National Cabinet to ensure that further development does not occur in areas of 1-in-100 flood risk or greater.

The boundary for no future development should take account of climate modelling of future increases in risk, in addition to current estimates of risk.

The Committee further recommends that the Australian Government explore mechanisms that it can adopt to give effect to this unilaterally, including:

Publicly disclosed risk information at the individual property level, including for new developments. This could be through a range of mechanisms, including:

oa portal informed by data provided to the Commonwealth government through the Hazards Insurance Partnership for all property released for development.

A regulatory mechanism to discourage banks from loaning for further development at a 1/100 risk or higher (such as risk rating banks’ capital to appropriately reflect flood risk; an agreement between government, the Australian Prudential Regulation Authority, and major banks that such loans will not occur, or other regulatory mechanisms). These measures could apply to lending to both developers and to residential purchasers.

Access to any flood pool (or subsidies) would not be available to properties approved in high-risk areas after the creation of the scheme.

9.261The Committee recommends that the Australian Government work with state, territory and local governments through National Cabinet to ensure that publicly disclosed risk information at the individual property level is available through the property conveyancing process or mandated in state rental agreement regulation.

9.262The Committee recommends that building codes and planning rules be strengthened and future-proofed to improve the resilience of communities and households, consistent with Recommendation 2 of the Actuaries Institute’s Funding for Flood Costs report.

This should take into account not just current flood risks, but also projected increases in risks based on climate modelling

Consideration should be given to the publication of a freely available disaster risk rating system.

9.263The Committee recommends the Australian Government continue to fund community level mitigation, ensuring at least $200 million per year ongoing.

9.264The Committee recommends that a climate financing framework be developed in relation to government mitigation and adaptation funding. That this framework create the appropriate incentives for both public sector and private sector investment in mitigation and more resilient buildings and infrastructure. This would include:

Rigorous project evaluation and prioritisation, including cost benefit analysis and the incorporation of climate modelling.

Strong project governance including reporting, monitoring and evaluation.

Post-project price monitoring where appropriate.

The development of resilience financing where feasible and appropriate.

The exploration of public-private partnerships to coinvest in new or upgraded infrastructure.

9.265The Committee recommends the General Insurance Code of Practice be amended to require that insurers be required to consider relevant property-level mitigation measures in any new or renewing insurance policy, and to demonstrate how those measures have been reasonably reflected in the proposed premium.

After the Code is registered with the Australian Securities and Investments Commission, the Committee also recommends that the Treasurer issue a ministerial direction for the appropriate regulator to periodically review insurers’ compliance with passing on premium reductions.

9.266The Committee recommends the Australian Government consider measures to reduce household level risks, including whether it would be appropriate to extend the Bushfire Resilience Rating Home Self-Assessment App to flood risks.

9.267The Committee recommends the Australian Government work with the Insurance Council of Australia to develop and publish advice on the mitigation measures households could undertake to improve the flood resilience of their property.

9.268The Committee recommends the Australian Government and Insurance Council of Australia explore measures to facilitate the exchange of substantiated information about the resilience of a property to insurers, including new mitigation measures undertaken through state-based grant and loan programs.

9.269The Committee recommends insurers facilitate options for policyholders to provide additional information to insurers about the resilience of their property to flood risks, and make further investments to better integrate reported resilience measures into the calculations of premiums.

9.270The Committee recommends that state and territory governments develop buyback and resilience programs for households with very high flood risk and where alternative mitigation measures are unlikely to manage the risk. The Australian Government should consider working with state and territory governments, including through co-funding models, where appropriate.

9.271The Committee recommends the Australian Government work with state and territory governments to review the operation of existing buy-back schemes to ensure they are targeted appropriately and to evaluate the outcomes for households that have received assistance.

9.272The Committee recommends the Australian Government collaborate with state governments to implement measures to repurpose areas with high flood risk for alternative purposes, including returning developed land into a pre-developed state or repurposing land for recreational or agricultural use.

9.273The Committee recommends that insurers explore offering innovative insurance products that have the potential to improve the operation of the insurance market, including:

More flexible insurance products for small business, including:

opartial coverage for small businesses in high-risk areas; and

ocashflow assistance or other temporary benefits that might help a small business survive the immediate aftermath of a natural disaster.

Parametric insurance, particularly in high-risk areas and/or for consumers facing affordability stress.

9.274The Committee recommends that the New South Wales and Tasmanian governments collaborate with industry and local governments to reform emergency services levies, aiming to enhance premium affordability and reduce barriers to insurance uptake.

9.275The Committee recommends that state and territory governments remove state-based taxes on general insurance products and shift the tax burden toward less distortionary taxes.

Where state or territory governments reduce taxes or levies on insurers, that insurers commit to passing these savings on in full through lower premiums.