A national pool should be implemented to subsidise flood-prone properties’ high insurance premiums, according to a leading industry body.
The Actuaries Institute has recommended the creation of a fund poolA national pool should subsidise flood-prone properties’ high premiums to help those living in high-risk areas currently under the stress of expensive premiums.
“However, any assistance provided shouldn’t encourage risk-taking behaviour such as building in flood-prone areas,” Actuaries Institute CEO Melinda Howes said.
The funding would be conditional, based on risk-mitigating behaviours on behalf of councils and home owners.
These behaviours could include appropriate renovations and building levees in identified risk areas.
“The alternative to a flood insurance pool that has been suggested – the government providing direct premium subsidies – means the government gives money straight to insurers, providing no incentive for households or local councils to manage their own risk exposure,” said Ms Howes.
The Actuaries Institute submitted a recommendation to the National Disaster Insurance Review last year suggesting taxpayer levies, a small increase on all insurances, or direct government contributions could fund the pool.