Flood damage ‘wildly disproportionate’ to known exposure: ICA
Flood events accounted for more than 54% of losses from declared insurance events in the last five years despite only a small percentage of properties known to be at risk, the Insurance Council of Australia (ICA) says in a submission to a parliamentary inquiry.
More than 674,000 properties in Australia face a 1-in-100, 1-in-50 or 1-in-20-year risk. The total includes 229,455 properties with a 1-in-20-year risk, called a 5% annual exceedance probability.
ICA CEO Andrew Hall says the industry is committed to improving the way it responds to floods and welcomes the opportunity to make a submission to the House of Representatives economics committee.
“Our data analysis also shows that damage from flood is wildly disproportionate to the number of properties known to be exposed to flood risk, so by targeting mitigation efforts to those most affected we can relieve the burden on us all,” ICA CEO Andrew Hall said.
Floods typically lead to expensive insurance claims, and have been the major generator of losses in the past few years amid weather conditions underpinned by climate drivers associated with increased rainfall in eastern Australia.
National Flood Information Database analysis shows that more than half properties with a 1-in-20-year risk are in NSW, with the bulk of the remainder in Queensland and Victoria.
ICA’s submission to the committee inquiry into insurers’ responses to last year’s floods says it is preparing a series of policy papers, to be released in coming months, that will examine the nation’s “protection gap” and cover affordability.
The submission highlights findings from the recent industry-commissioned Deloitte report into the February/March floods in NSW and Queensland, and recommendations that have been accepted in principle by the ICA.
ICA presses for risk reduction action in areas such as resilience spending, land use planning and building code reforms. It also stresses the impact on premiums from insurance taxes.
The inquiry is due to deliver its final report by the end of September next year. A hearing, which was due to take place on Wednesday, has been rescheduled to the new year.