IAG Calls for Proactive Government Policy to Safeguard Households Financially Against Natural Disasters
‘The cycle of disaster recovery and rebuilding must be broken. Otherwise, insurance premiums will rise beyond the reach of many Australians,’ said IAG manager.
One of Australia’s largest insurance companies has emphasized that insurance should not be the sole method for managing financial risks associated with natural disasters. This comes as more households struggle to afford home insurance.
During a recent Senate inquiry hearing, Christa Marjoribanks, the executive general manager of the Insurance Australia Group (IAG), highlighted the need for the government to take proactive measures to address climate risks. She stated that relying solely on insurance is not a sustainable solution and that measures like land use planning, mitigation efforts, resilience building, and planned relocation are equally important.
Marjoribanks emphasized the importance of breaking the cycle of disaster recovery to prevent insurance premiums from becoming unaffordable for many Australians, especially those in high-risk areas.
IAG recommended that the government focus on strengthening land use planning with a resilience perspective to address underlying causes in high-risk areas. The company also suggested coordinated efforts between state and federal governments to tackle climate adaptation challenges.
Additionally, the IAG manager urged state governments to eliminate inefficient taxes that contribute to insurance affordability issues. Research conducted by IAG showed that these taxes not only increase insurance costs but can also prevent individuals from obtaining full coverage.
Marjoribanks’ remarks come as Australia faces a surge in households struggling to afford home insurance. Actuaries Institute CEO Elayne Grace reported that around 1.61 million Australian households, or 15%, are under extreme pressure when it comes to insurance affordability.
Furthermore, a report by the Actuaries Institute revealed that the median increase in home insurance premiums in Australia was 9% in the twelve months leading up to March, primarily due to rising reinsurance costs driven by increased perils costs.
In response to questions about the company’s pricing practices, IAG representatives denied engaging in price gouging. Marjoribanks emphasized that profits were necessary to cover large claims payouts and that pricing was based on forecasting factors such as claim costs and reinsurance expenses.
Overall, the focus is on breaking the cycle of disaster recovery, implementing proactive measures, and addressing the underlying causes of high insurance premiums to ensure affordability and availability for all Australians.
