Risk mitigation in focus as Australian flood losses mount

Insured loss estimates from the flooding in Australia’s southeast Queensland and New South Wales rose by another 8% over the weekend to surpass A$2bn, according to the Insurance Council of Australia (ICA), reports ILS-focused news service Artemis. On Friday, the ICA stressed the need to focus on significant investment in infrastructure and other defensive measures, to more effectively prevent and mitigate the rising number of catastrophic events faced by Australians. The number of flood claims filed and received by insurers has reached 135,690. This represents an increase of 7.3% since the ICA said the total bill would be in the region of A$1.77bn. In Friday’s note, the ICA said estimated losses in New South Wales had risen by 18% to reach $633m, while losses in Queensland had risen by 5% to reach $1.11bn. Property accounts for 81% of the estimated total, with motor at 16% and other at 3%, said the ICA. The ICA said that under its catastrophe protocol, insurers triage claims to deal with the most urgent and severe first. “This means some policyholders with claims that are less severe (such as if their home is habitable) may need to wait a few weeks until an assessor is able to review their claim,” explained the insurer group. As the cleanup moves into its second week in Brisbane and the Northern Rivers, and gets underway in western Sydney, insurers are cautioning that global materials shortages and local labour constraints will have an impact on the rebuild and recovery timeframe, it added. The Australian Bureau of Statistics reported that input costs for housing construction increased by 12% during the past 12 months, with strong demand for building materials being the main contributor. A recent update from the Australian Housing Industry Association found that the availability of all skilled building trades declined further in the most recent quarter, with trades such as bricklaying, carpentry, joinery, roofing and general building reporting the most severe shortages on record. Andrew Hall, CEO of the ICA, said the latest catastrophe in Australia highlights once again the need for serious investment in infrastructure to prevent and mitigate such events, and welcomed a commitment from government to do so. “The Insurance Council welcomes comments by Prime Minster Scott Morrison yesterday that the federal government will focus on investing in infrastructure to make communities more resilient to extreme weather events like this flood.The Insurance Council and insurers have been calling for an increase in federal government investment in this area to $200m per year, matched by the states and territories,” said Hall. “We have previously welcomed commitments also made by the federal opposition to increase this investment. Last month, we released our ‘building a more resilient Australia’ election platform and a supporting report from actuarial consultant Finity, which highlighted Lismore as one of nine locations in need of urgent flood-mitigation infrastructure. This infrastructure and mitigation investment is vitally important to prevent future harm and devastation to these communities, as we know flood events will inevitably repeat,” he added.

Risk mitigation in focus as Australian flood losses mount

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