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Response to Senate report on States' and Territories' disaster insurance

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THE HON NICOLA ROXON MP Attorney-General Minister for Emergency Management


19 July 2012


Attorney-General and Minister for Emergency Management Nicola Roxon today announced that the Australian Government has tabled its response to the Senate Economics References Committee report The asset insurance arrangements of Australian state governments.

“Severe and widespread recent natural disasters have been very costly to Australia over the last couple of years,” Ms Roxon said.

“With the increasing frequency and severity of natural disasters within Australia, it is important that all levels of government do as much as possible to build resilience and mitigate financial losses following a disaster.

“Having adequate insurance is just one way governments can address the risks of natural disasters and the challenges in recovering from them.

“I commend the Senate for recognising the need to review the insurance and re-insurance arrangements of States and Territories, and for recognising the need to examine the appropriateness of fiscal arrangements for natural disaster reconstruction efforts.”

The Senate report makes four recommendations aimed at improving the States’ and Territories’ insurance arrangements and how the Commonwealth considers these arrangements.

These include:

 ensuring that the States’ and Territories’ captive insurance and reinsurance arrangements are reported transparently and comparably;

 that the Commonwealth Grants Commission take into consideration State and Territory government’s past insurance and reinsurance receipts for natural disaster insurance premiums when determining States’ and Territories’ GST share; and

 defining the term ‘cost-effective’ as it relates to the 2011 Natural Disaster Relief and Recovery Arrangements Determination.

“The Commonwealth is or has implemented a number of initiatives that address the recommendations,” Ms Roxon said.

“In March last year the Commonwealth amended the Natural Disaster Relief and Recovery Arrangements to require ongoing reviews of States’ and Territories’ insurance arrangements to assess whether their arrangements are cost-effective and minimise taxpayers’ financial exposure borne following a disaster.

“The Commonwealth Grants Commission is analysing the States’ and Territories’ premium payments and insurance receipts for the last four financial years and used this information to calculate the recommended GST distribution for 2012-13.”

Ms Roxon added that households and businesses also need proper insurance against disasters.

“The government has also recently made regulations to establish the wording of a standard definition of ‘flood’ to be used in home building, home contents, small business and strata title insurance policies. The government is also in the process of introducing a one page key facts sheet which clearly sets out key information about specific policies,” Ms Roxon said.

“The Australian Government will continue to work with States and Territories to help reduce the cost of future disasters for all Australians.”

A copy of the Commonwealth response to the Committee’s report can be found at

For all media enquiries, please contact the Attorney-General’s Office on 0409 945 476