Small companies in regional Australia find flood insurance unaffordable, materially restricted and often effectively unavailable, and a risk-sharing arrangement is needed, a business leader has warned.

Taree Business Chamber president and Insure More broker Matthew Fawcett says affordability has shifted from being a private commercial matter to one requiring co-ordinated public policy intervention.

“Flood insurance reform for regional small businesses is not an insurance industry issue. It is an economic policy issue, a regional development issue and a matter of long-term fiscal prudence,” he says in a submission to a federal parliamentary committee inquiry.

Taree in NSW was flooded when the Manning River peaked at a record 6.5 metres last May, with the catastrophe worsening existing insurance problems.

“Of the 100 flood-affected businesses in Taree that I am aware of, the majority held no flood cover, not by choice but due to unaffordable premiums or insurer withdrawal,” Mr Fawcett says.

The submission urges the inquiry to recommend exploration and development of a structured flood risk-sharing or reinsurance mechanism for small businesses in high-risk regions, following the cyclone pool.

“No equivalent mechanism currently exists for SME flood risk. This is the central structural gap that this submission urges the committee to address,” he says. “I look forward to the feedback from the government’s research trip to the UK in 2025.”

The submission backs the Insurance Council of Australia’s $30 billion flood defence fund proposal, calls for a national mitigation strategy, and says insurers and reinsurers should be required, or incentivised, to release updated modelling after infrastructure is built.

“Transparent reassessment of modelled hazard is the prerequisite condition for premium relief in affected communities,” Mr Fawcett says.

He also calls for co-funded resilience programs for small businesses, with actions linked to “verifiable premium relief outcomes”.

Premises in Pulteney Street in Taree that were paying about $25,000 for the flood component of cover before last May have since faced a cost of about $68,000, while on some buildings it is unavailable, according to the submission.

Commercial property supply outside flood-prone areas is constrained and transition costs mostly prohibitive, and proximity to trade routes, logistics and communities is important.

Mr Fawcett says the resilience ratings scheme supported by ICA and the Resilient Building Council is a positive step, but its commercial uptake and integration into regional NSW underwriting remains limited.

Submissions are available here. 

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