Insurance Australia Group has dropped its support for a NSW government proposal to raise the Warragamba Dam wall, over concerns the project will damage Aboriginal heritage sites in the Blue Mountains west of Sydney.
At the insurer's annual general meeting on Friday, chairman Elizabeth Bryan will announce IAG's new position, following pressure from traditional owners, activists and shareholders, including the lodgement of a shareholder resolution.
It comes after documents leaked to media last month revealed a federal government review had uncovered major shortfalls in the NSW government's review of the impact the project would have on local Indigenous heritage sites.
On Thursday, IAG revealed a shareholder resolution calling on the insurer to withdraw support for the project had been dropped.
A spokeswoman for the insurer told The Australian Financial Review IAG no longer supported the proposal.
"At the AGM, IAG will outline its position on the Warragamba Dam. We don’t support any particular solution, but we do want any solution to be carefully thought through," she said.
The project, planned by NSW state-owned enterprise Water NSW, would raise the wall of the Warragamba Dam by around 14 metres, reducing the risk of flooding in the heavily populated Hawkesbury-Nepean Valley west of Sydney. Work is yet to begin on the wall, with the environmental impact statement due early next year.
Insurers have been vocal supporters of the project because it will reduce the cost of insuring properties in the valley, a cost that will likely grow as climate change increases the risk of heavy downpours.
But by sparing the valley from flooding, the raised wall would increase flood risk to World Heritage sites upstream, which contain Aboriginal rock art, tools and scar trees.
Gundungurra Traditional Owner Kazan Brown, said: "These sites are what my family have left behind. They are part of us. It's who we are. If the sites go under there will be nothing left. Most went under when the original Warragamba Dam was build in 1960. The only place our culture will exist is in history books."
The risk to those sites has long been known, and IAG came under heavy fire for its support of the project at its AGM last year.
But the issue appears to have finally got the attention of insurers following Rio Tinto's decision to blow up Aboriginal heritage sites in Juukan Gorge in Western Australia earlier this year. That act caused global outrage and led to the resignation of CEO Jean-Sebastien Jacques.
Harry Burkitt, the Colong Foundation for Wilderness campaign manager who led the shareholder resolution, welcomed IAG's decision, saying it represented "a major shift of sentiment from the insurance industry on raising the Warragamba Dam wall".
"We are grateful for the serious engagement from the chairman and her senior executive team. We look forward to developing a co-operative relationship moving forward," said Mr Burkitt.
"It's now time for the Suncorp and the Insurance Council of Australia to adopt the same position as IAG on this culturally and environmentally destructive dam proposal."
The Insurance Council of Australia also responded to pressure, announcing on Wednesday it would undertake a stakeholder consultation process to better understand the impact the Warragamba Dam wall raising proposal would have on cultural heritage sites.
ICA chief executive Andrew Hall said: "The insurance industry acknowledges the concerns of the local indigenous community over preservation of environmental and heritage areas within the Warragamba catchment, and getting the balance right is always a complex issue."
A NSW government spokesman said the final decision on the dam-raising proposal would "only be made after all environmental, cultural, financial and planning assessments are complete".
"Consistent with NSW Planning guidelines and assessment obligations, WaterNSW has been working closely with 22 registered Indigenous individuals and groups to understand any potential impacts to Aboriginal cultural heritage."
By James Fernyhough