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26 July 2014
The insurance industry needs a greater commitment from the Federal Government on flood mitigation and mapping, Insurance Council of Australia (ICA) President Rob Scott told ICA’s Regulatory Update in Sydney last week.
Mr Scott, who is MD of Wesfarmers Insurance, said that a year after last summer’s floods the insurance industry has weathered a high degree of scrutiny. “But regrettably we haven’t seen the same degree of commitment and action on issues required to protect our communities.”
He said ICA will be proactive in informing politicians and the public about insurance, so consumers make better decisions about risk and governments act on mitigation and risk reduction.
“We need to do a better job as an industry talking to the public and politicians about insurance,” he said.
Mr Scott also called for action on the 2009 Henry Review into the taxation system that recommended all state taxes on insurance be removed. The taxes add $4.6 billion to insurance policies.
Noting that insurers need flood information to price for risk, he said that although less than 10% of the population has any flood risk, that risk is substantial for some people.
And while price could be an issue for high-risk properties, it is important to mitigate existing risk and not add to it by increasing the number of properties exposed to loss.
Catriona Lowe, Co-CEO of the Consumer Action Law Centre, told the conference consumer groups are concerned there is no opt-out in some policies that have added flood cover, and the groups want to work with the industry on affordability mechanisms.
Mr Scott said the industry received 275,000 claims above normal in 2011 for losses approaching $5 billion, and it should be proud of its response.
“We need to ensure we have the capital and talent that can be called upon to deal with the next set of catastrophes.”
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