‘Bridge disaster insurance gap with more mitigation funding’

The economic
costs of natural disaster now far exceed insured losses and must be bridged by
greater investment in mitigation.

In a speech to this week’s Australian Business Roundtable for Disaster Resilience and Safer Communities, Geoff Summerhayes said the “high, rising and volatile costs” of natural disasters was leading to declining insurance affordability and accessibility.

The Australian
Prudential Regulation Authority (APRA) executive board member said tackling the
root cause “through greater investment in mitigation to protect homes, businesses
and infrastructure from damage” was the most effective way of addressing the
issue.

“There is no doubt that some physical mitigation measures, such as flood levees or sea walls, can be expensive, however the billions spent each year cleaning up from disasters suggests the money is there – it’s just being spent after the damage is done,” he said.

“There
is a lot of merit in the Productivity Commission’s assessment that paying for
mitigation is far cheaper than paying for post-event remediation and enduring
the subsequent economic repercussions.”

“Ultimately,
creating more resilient communities that are better able to withstand the
physical and financial impacts of natural disasters and a changing climate
requires a whole-of-society response.

“There
are some problems that are simply too big, too complex or too expensive for any
individual household, business or organisation to fix on their own,” Mr
Summerhayes said.