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Flood claims to fall short of loss reality: Risk Frontiers

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Claims data for NSW flooding in March won’t reflect the full extent of damage as prohibitive insurance costs meant many people with properties at risk from inundation had not taken out cover, Risk Frontiers says following research on Mid North Coast impacts.

Insurance affordability in areas clearly at risk emerged as one of the key issues during a field trip survey, with some residents and business owners citing quotes ranging from $5000 to $30,000 a year for policies covering flood.

“The observations from this field study further support the need for flood mitigation to reduce flood damages and promote insurance affordability,” the briefing note says.

Another common concern related to the lack of warning and mitigative action, such as sandbags, with some residents claiming they were either misinformed or warned too late, and then felt aspects of the process to recover were unclear.

The Insurance Council of Australia declared a catastrophe for the flooding in NSW and Southeast Queensland. Losses had reached $624 million with about 42,000 claims lodged as of April 23.

The impact of the weather event was exacerbated as it followed a wetter-than-usual summer and the low-pressure trough was held stationary by a blocking high pressure system. In NSW, the rain affected a large part of the state, but with significant regional variations across 1500 gauges analysed by Risk Frontiers.

Bellwood, at Nambucca Heads, recorded a seven-day total of 1064 millimetres of rain between March 17-23.

In Wingham’s main street, a retail business was inundated to 1.75 metres, losing all their stock with an estimated value of more than $1 million.

“The staff indicated that the business was not insured. They indicated that there was no warning and this was worse than the 1978 flood event,” the briefing note says.

Local residents at Port Macquarie expressed major discrepancies between warnings received and ultimate storm outcomes.

One person recounted that after watching how quickly the water was rising, he called the SES and was told the flood would not exceed 1.65 metres. Not convinced, he phoned the Bureau of Meteorology, which referred him back to the SES. He began photographing flood heights when the water surpassed the 2-metre level on the flood depth indicator across from his property.

“Further study on the effectiveness of flood warnings during this event and the community response to these warnings in impacted areas is recommended,” the briefing note says.

Risk Frontiers has also undertaken another field trip to study flood damage in Western Sydney, with the findings to be reported in a follow-up briefing note.