The Actuaries Institute says it strongly supports a greater balance of spending on natural disasters to be pre-funding on mitigation and adaptation to prevent property damage, rather than post-disaster funding on relief and recovery.
This statement was made in the Institute’s submission last week to the Royal Commission into National Natural Disaster Arrangements.
Mitigation and adaptation measures can reduce insurance premiums, providing greater access to financial security for all Australians, and less reliance on the government and public expenditure, says the submission. Currently, the balance of spending is heavily weighted towards post-disaster funding. It is accepted that the return on investment from considered pre-funding is many times greater than the return on post-disaster funding.
Other key points made by the Actuaries Institute are:
• The Institute encourages land use planning processes to be dynamic to reflect the continually evolving understanding of localised risks. Furthermore, as the understanding of risks improves and the suitability of land to specific uses changes, consideration needs to be given to equitable remediation processes.
• The Institute strongly encourages reconsideration of the Australian Building Codes Board’s remit to explicitly include consideration of proportionate and cost-effective protection of property over the expected lifetime of the building and to take account of likely future conditions and stresses those structures should be able to withstand over that lifetime.
• Infrastructure to reduce the financial loss and property damage from individual natural perils must be well maintained to ensure it remains fit for purpose over a long structural life.
• The Institute strongly supports the continued progression of, and funding for, the work commenced by the National Resilience Taskforce now within the Disaster Resilience branch of the Department of Home Affairs.
• The Institute also strongly supports the recommendations of the Productivity Commission in its 2015 report on Natural Disaster Funding Arrangements that the Australian and State and Territory governments include transparent natural disaster liabilities in their budgets.
Based on expert scientific findings, the Institute recognises that climate change is expected to have major environmental, economic and social impacts, and poses a serious risk to industries and financial institutions. Long-term consideration of climate change is essential as it is likely to trigger further changes in risk and understanding of it. In particular, the implications of climate change need to be considered in each of the key mitigation and adaptation areas – land use planning, building standards, retrofitting of properties and infrastructure investment decisions.
Specific key likely impacts of climate change which need to be considered in the context of resilience and relief and recovery measures include:
• The poleward (southerly) migration of severe cyclones to areas which currently do not have adequate protection against cyclones within building standards;
• Increased intensity of rainfall and flash flooding;
• Increased frequency, intensity and/or duration of heatwaves; • Potential increase in severe hail;
• Sea level rise increasing storm surge risk; and
• Increased bushfire risk as the number of hotter and drier days increases.