By Gabriella Janu, Lawyer
To actively contribute to a reduction of the financial impacts of natural disasters, insurers are reliant on the state and federal governments implementing consistent reform to building codes and standards and land-use planning across Australia.
The Insurance Council of Australia (ICA) and Master Builders Australia (MBA) hosted a Building Stronger Homes Roundtable on 20 April 2021, the third of the roundtable series directed at improving the resilience and insurability of Australian homes.
The Building Stronger Homes Roundtable was established by the ICA and MBA in response to the Royal Commission into National Natural Disaster Arrangements and its recognition of the importance of better building standards and land-use planning to the protection of Australian homes and communities from natural disasters.
Participants of the roundtable series include representatives from the state and federal governments, Standard Australia, the Australian Building Codes Board and property, real estate, banking and architect industries. Improved information sharing across these groups and the provision of practical industry insights is hoped to facilitate a better understanding of building resilience needs and to improve consumer information on housing resilience.
The theme of the third roundtable was “New Builds, Codes, Standards, and Land Use Planning” and its focus was developing strategies to build new homes to better withstand extreme weather events. It followed the focus of the first two roundtables, being the financial impacts of natural disasters, lessons from existing resilient home programs and how to make existing homes more resilient.
An important topic of discussion at the third roundtable was the current lack of any system to assess and record the level of resilience in a building. Without such a system, how can insurers be expected to accurately adjust premiums?
Insurance is an essential protective mechanism of, arguably, the greatest single economic asset of Australians, the family home. Insurers need a way to properly price the risks associated with this asset, including extreme weather events, which were projected in the final report of the Royal Commission into National Disaster Arrangements to continue increasing in number and severity in the coming years.
Mitigating the risks posed by extreme weather events by building more resilient homes not only protects the homes, but also the financial wellbeing of the owners. If insureds buy more resilient homes, or develop their existing homes to become more resilient, they can be rewarded by lower insurance premiums, which will hopefully prevent a huge issue exposed by previous extreme weather events, of homes being severely under-insured.
The third roundtable developed five strategies to build resilient homes that can better withstand extreme weather events. The strategies are as follows:
- “Simpler and cost-effective access to standards for builders and inspectors to support compliance;
- Land use planning reforms that better incorporate the experience and insights of the insurance and building industries in the aftermath of natural disasters;
- Increased government incentives to invest in resilience measures when building new homes to improve their durability;
- Development of resilience information tools that assist the industry and consumers in building more resilient homes; and
- Establishment of an information-sharing hub between the government and the industry to share risk information, land planning data, and building experience.”
The roundtable series has real potential to prompt influential change that facilitates greater protection of homes and communities from the detrimental impacts of extreme weather events, but its success will ultimately rest on the Building Ministers of each jurisdiction implementing consistent reforms in line with the roundtable’s recommendations.
The ICA and MBA will host the fourth and final roundtable in June 2021. It will be interesting to see the extent to which the Building Stronger Homes Roundtable influences change, if any at all.
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