Suncorp has begun cutting the cost of premiums for residents of a flood-prone region of Queensland, signalling that benefits of mitigation efforts will flow through to local communities.
The chief executive of Suncorp's personal insurance division, Mark Milliner, will travel to Charleville on Wednesday to announce that customers in the outback town will have their home and contents premiums fall by $400 on average to about $990 the next time they renew their policies.
The reduction follows the completion of a $20 million levee and diversion project that reduces the risks of inundation for the town. Without spending on such earthworks, the average premium would be $3000 a year.
Suncorp sparked anger last year when it blacklisted the nearby towns of Roma and Emerald after three major floods in as many years, to highlight the heavy costs of not investing in mitigation efforts. Customers were said to have complained that premiums had risen as much as tenfold after the move.
"We paid out over $100 million in claims, and governments would have paid that much and more," Mr Milliner said.
The company said earlier this year that Roma had been discussing the construction of a levee since 2005, with the cost between $2 million and $10 million. The cost of rescuing residents from in and around Roma by helicopter in 2011 alone cost about $10 million.
Since then the issue of mitigation has gained national attention, with the Gillard government pledging $7 million in February and the Queensland government $13 million to build a levy at Roma.
The Greens are also going to this election pledging to lift annual federal spending on mitigation for floods, fires and other disasters from $50 million to $350 million, with the increase paid for by a levy on thermal coal exports.
Work on Roma's project could begin within a month and take from nine months to a year to complete, Mr Milliner said. Emerald, meanwhile, is planning to spend $14 million on flood protection.
Even so, Suncorp will not resume coverage in Roma or Emerald until it can determine how much the risk has been reduced.
The insurance industry applauded last week's report by a Senate inquiry into extreme weather events from climate change. The inquiry recommended a range of measures including better flood mapping and strong codes to make buildings more resilient.
"Queensland does have a higher risk from catastrophes than some of the other states," Mr Milliner said. "But clearly, there are areas of flood in every state and we want to work with governments to understand the risk."