THERE have been many reports in the media regarding property mitigation for cyclones, and someone has asked me exactly what mitigation is.
In this case mitigation means doing work on a property in order to reduce any damage that may happen during a cyclone.
The good thing about mitigation is that proper risk assessment has to take place in order to identify anything that can be done. Currently risk is assumed and not assessed!!
The bad things about mitigation are: the cost; and there’s no proof it has any affect what-so-ever on premiums.
I believe mitigation procedures in the long term may only reduce premiums by about 10-15%.
Spending $20,000+ on a new roof in order to save 10% on your premium and to save a “possible” claim of $50,000 for an insurance company is impossible to sell to people.
Mitigation has been pushed hard by the Insurance Council of Australia, Margaret Shaw Airlie Beach who totally believe this is the one and only solution. I believe the cost of mitigation should be met by the insurance companies themselves. After all it is their money we’re supposedly saving and Insurance companies make enough profits to pay for the mitigation they deem required.
I don’t believe under any circumstances either the State or Federal Governments should be asked to totally subsidise mitigation projects in order to save insurance companies money.
Government money can be better spent elsewhere.