The economic costs of natural disaster now far exceed insured losses and must be bridged by greater investment in mitigation.
In a speech to this week’s Australian Business Roundtable for Disaster Resilience and Safer Communities, Geoff Summerhayes said the “high, rising and volatile costs” of natural disasters was leading to declining insurance affordability and accessibility.
The Australian Prudential Regulation Authority (APRA) executive board member said tackling the root cause “through greater investment in mitigation to protect homes, businesses and infrastructure from damage” was the most effective way of addressing the issue.
“There is no doubt that some physical mitigation measures, such as flood levees or sea walls, can be expensive, however the billions spent each year cleaning up from disasters suggests the money is there – it’s just being spent after the damage is done,” he said.
“There is a lot of merit in the Productivity Commission’s assessment that paying for mitigation is far cheaper than paying for post-event remediation and enduring the subsequent economic repercussions.”
“Ultimately, creating more resilient communities that are better able to withstand the physical and financial impacts of natural disasters and a changing climate requires a whole-of-society response.
“There are some problems that are simply too big, too complex or too expensive for any individual household, business or organisation to fix on their own,” Mr Summerhayes said.