Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I welcome the opportunity to speak briefly on this matter, because rising insurance costs across all sectors of insurance are directly contributing to cost-of-living pressures, inflation and household financial stress. For years climate scientists have been warning that extreme weather events are going to become more frequent and more severe. The warnings have become reality. Across the world, fires, floods, hurricanes, tornadoes and drought are constantly with us, including here in Australia.

Wherever they occur throughout the world also affects us because most of the insurers insure with global insurance companies who spread their risks right across the world. Every year now our nation seems to react to one or more natural disasters that cause extensive destruction and loss of lives, property and infrastructure. Such destruction increases insurance claims, as other speakers have already said, and ultimately results in higher insurance premiums.

Secondly, the increased risks associated with extreme weather events which have been forecast directly increase the cost of insurance. If the risk is greater, the insurance premium is greater. Increased risks also lead to more people dropping out of insurance cover at a time when, in fact, it is needed the most. I understand that right now, based on the latest figures, somewhere between 15 and 25 per cent of Australian households have no insurance at all.

What has also been notable is that the insurance costs have lifted to a point where they are simply unaffordable for so many families. In fact, according to one report, between 2020 and 2023, Allianz, one of our biggest insurers, increased their costs by some 56 per cent. Adding to the extreme weather issues, the current high construction costs and high repair costs, once the damage occurs, become another additional cost that has to be borne by the homeowner and by the insurance company on top of those costs. And, again, we see an increase in insurance premiums.

The insurance issue is being talked about each and every day in the community, and I'm pleased to see that it is also the subject of a parliamentary inquiry led by the member for Fraser. I look forward to the findings of that report. I believe the member for Bennelong mentioned it as a sitting member of that committee as well. Their contribution will certainly help guide us.

There are measures that can be taken—and, again, other members have spoken about this—to minimise the risk. Changing and strengthening the building code and the planning regulations, undergrounding powerlines, implementing flood levies and improving disaster preparedness to minimise destruction are things we can do.

I want to point to one example in my own community. Only earlier this year, in a community led initiative following the devastating 2015 Sampson Flat bushfires, Jan Verrall and Denise Elland spearheaded a drive to establish a water tank in their region in the Upper Hermitage area so that when a future fire occurs, unlike in the last case, the CFS trucks are able to access water to put out those fires. It was a community led initiative. It was opened only a couple of months ago, and I commend that local committee for doing so.

Having said all that, I also believe that the insurance companies are profiteering. Across all insurance sectors, over the last four financial years, the insurance sector, according to one report, made $7.3 billion in profit. So, whilst the home insurance areas might be struggling, across all sectors they made $7.3 billion in profit. I suspect they've done that because they push up their premiums on the argument that everything is going up, when the truth of the matter is that they should also spread their risk.

The government is responding. As has been said, we have the Hazards Insurance Partnership, where the government and the insurance sector are sharing data. There is a $4 billion disaster resilience, recovery and readiness funding in place. National planning and building codes are being discussed right now across the country. The insurance readiness and self-assessment rating scheme, which also helps lower insurance, is currently underway. This is an issue that requires the collaboration of all three levels of government, the insurance sector and the broader community. I believe that the message is out there loud and clear, and that is happening right now.

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