Insurance Council of Australia deputy chair Richard Feledy delivered a candid speech at the peak body’s annual dinner in Sydney last week.

The section where he discussed the insurance affordability issue is reported in full below.

“Australians are under pressure. They feel it at the checkout. At the petrol pump. In their power bills. In the cost of building, repairing and replacing the things they rely on every day.

“And they feel it when it’s time to renew their insurance.

“We know insurance affordability is a genuine concern for many households and businesses. And we know that some Australians are making difficult decisions as a result.

“They’re cutting back elsewhere so they can afford the essentials. Some are forgoing the protection insurance offers.

“If we’re serious about addressing that challenge, we also need to be honest about what’s driving it and what we can and cannot tackle as an industry.

“Inflation has had a significant impact on our industry. The cost of rebuilding homes has increased by 50% since before the pandemic and premiums have reflected that reality.

“But even if governments succeed in putting the inflation genie back in the bottle, two other forces will continue pushing premiums higher year after year: rising risk, and taxes on insurance.

“And these areas really need government support. That doesn’t mean industry has no role to play. Far from it. But it does mean that meaningful improvements in affordability will require governments and industry working together.

“And nowhere is that more evident than here in NSW. The emergency services levy remains one of the clearest examples of a tax that increases the cost of insurance.

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“It makes protection between 10% and 34% more expensive for households, businesses and motorists at a time when affordability is already under significant pressure.

“That’s why the industry’s position has been so consistent. We support properly funded emergency services. But taxing insurance is not the best way to do it.

“I do want to acknowledge the progress that has been made. [The state] government’s commitment to reform, the options paper and the referral to parliamentary inquiry this year have all moved this issue forward.

“After talking about this issue for many years, we now have an opportunity to deliver meaningful reform. We can’t afford to miss it.

“We understand the need for bipartisan support to get it over the line, and the industry will do our part working across the parliament to make the case for this reform.

“Because removing the levy would provide real relief for our customers across NSW, particularly those facing the greatest exposure to risk.

“We cannot have a conversation about affordability without talking about risk. We understand risk better than we ever have before.

“We have better data. Better modelling. Better insight into the challenges facing Australian communities.

“But understanding risk and reducing risk are two very different things. Insurers can identify risk. We can model it. We can price it. But we cannot reduce it alone.

“That requires governments, communities and industry working together.

“The international experience is instructive. In places like California, government schemes have stepped in to make cover more affordable, but in doing so they limited the coverage terms and masked the very risk signals that insurance pricing is meant to send. 

“Locally, we have some strong foundations already in place. The Commonwealth’s Disaster Ready Fund. The Hazards Insurance Partnership. State-based resilience programs. The flood buyback initiatives established after the 2022 floods, including here in NSW.

“These are all examples of what can happen when we move beyond talking about risk and start reducing it.

“Because if we’re serious about affordability in the long term, there is no more effective solution than making communities safer and more resilient.

“Over the last five years, our industry has matured its co-ordination on risk reduction with every level of government.

“The challenge now is to build on that momentum.”