Insurance Council of Australia

Disaster & catastrophes

2022 flood cost continues to rise

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2022 flood cost continues to rise

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News release

Wednesday, 1 June 2022

The cost of the record-breaking flood that hit South-East Queensland and Northern New South Wales earlier this year continues to rise and is now Australia’s fourth costliest disaster, the Insurance Council of Australia (ICA) said today.

As of Tuesday 31 May, insured losses are estimated at $4.3 billion from 216,465 claims across both states.  

The cost is almost double that of the 2011 Brisbane flood, which saw $2.3 billion in insured losses. 

The extreme weather event has now surpassed the 1989 Newcastle Earthquake, which recorded $4.24 billion in insured losses and falls fourth behind the following (all normalised to 2017 values):  

  • Eastern Sydney Hailstorm (1999, $5.57 billion) 
  • Cyclone Tracey (1974, $5.04 billion) 
  • Cyclone Dinah (1967, $4.69 billion) 

The 28 per cent rise in estimated claims cost from last month’s figures is largely due to the progression in the claims assessment process and an increase in commercial claims, which are typically slower to come through and have a greater cost per claim. 

Insurers are working as fast as possible to support their customers, with more than 20 per cent of claims already closed and almost $1 billion paid to policyholders.  

Quote attributable to Andrew Hall, CEO, Insurance Council of Australia:  

The Insurance Council and insurers continue to work with communities affected by this record-breaking flood, now Australia’s fourth costliest disaster. 

Over the past two weeks we have been holding community forums in flood-impacted areas of New South Wales, and next month will spend two weeks holding forums in Queensland towns and in Brisbane.  

Keeping Australia insurable as extreme weather events worsen requires governments to invest in appropriate physical mitigation and adaptation strategies.  

Insurers and the Insurance Council look forward to working with the Albanese Government to implement its $200 million Prevent, Repair, Rebuild package, to better protect Australian homes and communities from the impacts of extreme weather.

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Community resilience to flood can improve, new report finds

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Community resilience to flood can improve, new report finds

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News release

A new report released today by the Insurance Council of Australia (ICA) has found current land-use planning rules are not properly protecting Australians from worsening flood risk but can be improved.

Estimates show more than one million private properties, or about one in 10 homes, have some level of flood risk in Australia.

Revealed in the third of ICA’s Climate Change Impact report series, Flooding and Future Risks, the report identifies the need for an overhaul of the rules governing how and where new homes are built.

It notes as the climate continues to warm existing flood zones are likely to expand and expose more property and assets.

While the report focuses on modern homes (built post-2000) and managing flood risk to new development, it also identifies important measures to mitigate the risk of flood in established areas, such as investing in levees and floodways.

The report, which draws on analysis conducted by James Cook University Cyclone Testing Station in association with Risk Frontiers, leverages data from thousands of flood claims covering four recent flood events.

The report finds that:

Current land use planning settings and associated building controls do not eliminate flood risk to modern properties

The current building code does not consider building resilience to flood risk

There are key data gaps that prevent insurers and homeowners from building an accurate picture of flood risk, particularly in a changing climate.

The report identifies flooding as one of the costliest extreme weather events in Australia.

The total cost of floods, from river flooding and high intensity rainfall, since ICA records began in 1970 is in excess of $21.3 billion.

The cost of this year’s floods across south-east Queensland and northern New South Wales is estimated to be $3.346 billion, making it Australia’s costliest flood ever.

The report references analysis by financial actuary consultancy Finity for the Insurance Council, proposing a five-year $2 billion Federal Government resilience investment program to better protect Australians from flood as well as cyclones, bushfire and coastal risks.

Quote attributable to ICA CEO Andrew Hall:

This report again underscores the need to make better decisions in land use planning, building standards and government investment in mitigation works if we are going to end this cycle of flood impacts on homes and businesses in Australia.

Addressing the risks identified in this report will play a key role in better protecting communities in the face of worsening flooding and help improve access to affordable insurance coverage.

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Insurance Council welcomes resilience and cyber investment

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Insurance Council welcomes resilience and cyber investment

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News release

Tuesday, 29 March 2022

Key budget takeaways impacting insurance:

  • $268.1 million in resilience preparedness related measures
  • $9.9 billion in cyber security over 10 years to improve cyber preparedness
  • $2 billion expansion of the Home Guarantee Scheme

The Insurance Council of Australia (ICA) today welcomed the Federal Government’s 2022-23 Budget announcement of $268 million in related measures to better protect Australians from the impacts of extreme weather and improve protections against cyber attacks. 

Under the Emergency Management Fund, the Government has committed $150 million per annum for recovery and post-disaster efforts over the next two years. An additional $116.4 million has been provided to the Black Summer Bushfire Recovery Program, funding 524 community projects with total program investment of $390 million.

Emergency Management Australia has received an additional $1.7 million to better share data and information across states and territories during large scale disasters.

The ICA has long been calling for the Federal Government to lift its investment in this area, and just last month released its Building a More Resilient Australia report which called for a doubling of Federal Government investment to $200 million in this area over the next five years, matched by the states and territories.  

The ICA’s proposed $2 billion resilience investment pipeline included:

  • $522 million for local projects such as flood levees to defend regional towns 
  • $413 million to better protect homes against flood, Australia’s most expensive natural peril, by raising utilities and services above the expected floodline
  • $221 million to cyclone-proof more than 44,000 homes in northern Australia 
  • $712 million to support the selective reduction of fuel in our forests 
  • $37 million for an improved national flood early warning system, estimated to increase the lead time for flood warnings from 3-5 to 10-15 days
  • $10 million to establish a national coastal hazard information database  

While the two-year commitment to resilience funding is welcome, sustained and greater funding in this area is required if the risk profile of communities exposed to extreme weather is to change.

The Insurance Council welcomes the Government’s $9.9 billion investment over 10 years to boost the nation’s capacity to prevent and respond to cyber threats.

This follows the release of an Insurance Council report on Monday, Cyber Insurance: Protecting our way of life in a digital world, which highlights the challenges to maintaining and developing a cyber insurance market to support Australian individuals, businesses and organisations operating in a digital economy.

As announced yesterday, the Insurance Council and those members who offer Lenders Mortgage Insurance (LMI) remain concerned about the continued expansion of the Home Guarantee Scheme, which removes the need for eligible borrowers to have LMI.

By displacing a proportion of the LMI market, the cost of providing LMI to borrowers who do not access the Scheme is potentially impacted. 

Comment attributable to Andrew Hall, CEO Insurance Council of Australia: 

The Insurance Council has long been calling for the level of investment in resilience measures to be increased, so funds confirmed in the Federal Budget are an important step in the right direction. 

The funds identified for the northern rivers rebuild is needed to ensure that community can rebuild stronger homes and infrastructure in a way that makes them more resilient to future extreme weather events.

While we are pleased the Federal Government is heeding this important call to step up its funding in resilience measures, there are dozens of other communities in Australia that remain exposed and require similar assistance, and we look forward to working with all levels of Government to assist in resilience and mitigation efforts.

Insurers welcome additional investment in cyber-security and resilience related measures to better protect Australian from the impacts of extreme weather and cyber threats in the digital age. We look forward to working with the Government in these important areas of public policy.

Useful links

ICA Election Platform
ICA Cyber Insurance White Paper
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New survey shows community backs resilience investment

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New survey shows community backs resilience investment

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News release

Monday, 21 March 2022 

Two thirds of those living in communities impacted by the recent floods do not believe governments are investing enough to protect homes and communities from extreme weather events, a new survey undertaken for the Insurance Council of Australia (ICA) has found.

More than 90 per cent of those who want more invested think government spending in measures to better protect against extreme weather should at least double, with 57 per cent saying whatever is required should be spent.

The survey of more than 1,000 people from three flood-impacted regions in SE Queensland and New South Wales found that 51 per cent believe state and Federal governments have equal responsibility for this area, 22 per cent say state governments, and 11 per cent say the Federal Government.

An overwhelming 94 per cent of people surveyed say there should be better controls on where homes are built so they are not at risk of flood.

Flood-impacted communities have a strong understanding of what is driving insurance affordability and availability constraints, with 47 per cent saying the reason flood cover can be difficult or expensive to obtain is the risk of flood and 11 per cent citing climate change, with just one in five saying this is driven by insurer profits.

Alarmingly, 37 per cent of those surveyed say they don’t have enough insurance to rebuild if required.

Last month the ICA released its election platform, Building a More Resilient Australia, which called for a range of measures to better protect households and communities from the impacts of extreme weather and put downward pressure on premiums, including:

  • A doubling of Federal funding to $200 million a year over five years for household retrofits and community protection projects, matched by the states and territories, to fund measures including:
  • $522 million for local projects such as flood levees to defend regional towns
  • $413 million to better protect homes against flood by raising utilities and services above the expected floodline
  • $37 million for an improved national flood early warning system, estimated to increase the lead time for flood warnings from 3-5 to 10-15 days
  • Better land use planning so no more homes are built in harms’ way
  • Update the national building code to include building resilience as a standard
  • Remove state taxes and charges on insurance, which numerous inquiries have found to discourage adequate cover by driving up the cost of premiums.

Comment attributable to Andrew Hall, CEO Insurance Council of Australia:

The Insurance Council has long called for greater investment in measures that better protect homes and communities from the impact of extreme weather.

This most recent flood has unfortunately brought this issue into sharp relief, and now those directly impacted have added their voices to this call.

With two thirds of those impacted by the most recent devastating floods calling for funding to be significantly increased, it’s way past time for governments to act.

Impacted communities clearly want state and federal governments to work together to solve this issue and see both levels of government equally responsible.

The community also clearly understands the folly of allowing development to take place on floodplains.

Insurers have a ready-made plan for investment in projects that will better protect extreme weather-exposed communities.

We’re also ready to start work with governments to review land use planning, improving building standards, and removing state taxes on insurance products.

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About the survey: This quantitative research study was sampled using Kantar Profile’s Lifepoints network, on behalf of the Insurance Council of Australia from Friday, March 11 to Monday, March 14, 2022. More than 1,000 people of all age groups were surveyed across flood-impacted regions including the Northern Rivers and Western Sydney in NSW and Greater Brisbane in Queensland. Respondent data was subject to standard data quality and engagement checks, including digital fingerprinting to ensure unique respondents only.

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ICA Welcomes Federal Government Disaster Fund

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ICA Welcomes Federal Government Disaster Fund

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News release

Friday 18 March 2022

The Insurance Council of Australia (ICA) has today welcomed the Federal Government’s decision to draw down on its Emergency Response Fund and inject $150 million to communities devastated by the recent floods. 

The Queensland and New South Wales governments will each receive $75 million to assist in immediate disaster recovery, as well as much-needed funding for future disaster risk mitigation and resilience initiatives. 

The Insurance Council and insurers have long been calling for greater investment in making homes, businesses and communities more resilient in the face of worsening extreme weather. 

Late last month, the Insurance Council released our election platform, Building a More Resilient Australia, calling for a doubling of Federal funding to $200 million a year matched by states and territories. 

The platform called for a range of measures to better protect households and communities from the impacts of extreme weather and put downward pressure on premiums. 

Comment attributable to Andrew Hall, CEO Insurance Council of Australia:  

In the past two weeks we have seen millions impacted by worsening extreme weather as a result of climate change.  

The devastation we have witnessed is evidence of the urgent need to improve community resilience in areas with high risk of extreme weather impacts. 

We welcome this much needed investment, not only for communities in desperate need of help now but which, when the time comes to build again, will need investment that makes them safer and more resilient.  

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Frequently asked questions after a disaster

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Frequently asked questions after a disaster

The Insurance Council of Australia is the representative body for General Insurers in Australia. While we’re unable to provide consumers with personal advice on products or insurers, we are on the ground following disasters to coordinate insurer response and respond to general enquiries related to the claims, clean-up and recovery process.

Only return to your property when emergency services give the go ahead. If water has entered the property, don’t turn on your electricity until it has been inspected by an electrician.

Contact your insurance company as soon as possible to lodge a claim and seek guidance on the claims process.

Contact your insurer immediately. If you have home or building insurance, your policy may provide emergency temporary accommodation.

Contact your insurer as soon as possible to lodge a claim and seek guidance on the claims process. Don’t worry if you can’t find your insurance papers, insurers have electronic records and need only your name and address.

If water has entered your property, don’t turn on your electricity until it has been inspected by an electrician. If you are without power, gas or NBN, check with your utilities supplier or networks on when you will be reconnected. You do not need to wait for your insurance assessor to visit your property before your utilities are reconnected.

You can start cleaning up but first take pictures or videos of damage to the property and possessions as evidence for your claim. If you have security footage of the event, make this available.

  • Make a list of each item damaged and include a detailed description, such as brand, model and serial number if possible.
  • Take photos before removing any water damaged or soaked items that may pose a health risk. 
  • Store damaged or destroyed items somewhere safe where they don’t pose a health risk.
  • Do not throw away goods that could be salvaged or repaired.
  • Speak to your insurer before authorising any building work, including emergency repairs.

An insurance assessor will inspect your property as quickly as possible once you’ve lodged a claim. That said, following large disasters, access to your property may be limited for days or even weeks. Your insurer will tell you when to expect your assessor.

Unfortunately, disasters can attract fraudsters looking to profit from others misfortune. If a builder or assessor unexpectedly arrives at your door offering services, you may ask to see some identification for your peace of mind. You may also contact your insurer to confirm the builder or assessor has been appointed to assist with your claim.

An excess is the amount you have agreed to pay towards each incident. The specific amount will be set out in your Certificate of Insurance. You may be required to pay more than one excess depending on the circumstances. If you are unsure, ask your insurer. A Disaster Declaration does not remove your obligation to pay your excess.

Speak to your insurer or broker if you’re not sure. Flood has a standard definition and for domestic products is offered in four ways:

  • Standard inclusion
  • Standard inclusion, opt out at customer request
  • Not standard inclusion, opt in at customer request
  • Not standard inclusion

Most domestic products are purchased direct from insurers. Customers should review their policy documentation or contact their insurer to confirm the cover they have in place.

For commercial products, flood cover is not standard and has to be opted into. Most commercial products are purchased via intermediaries i.e. brokers. Customers should review their policy documentation or contact their Broker to confirm the cover they have in place.

The covering of normally dry land by water that has escaped or been released from the normal confines of:

  • any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or
  • any reservoir, canal, or dam.

If you opted out of flood cover, did not opt in to flood cover, or your policy excludes flood, your insurer may still assess any claim you make to determine how your home was inundated. This may be required to establish whether other inclusions in your policy (cover for storm water run-off for example) can cover all or part of your claim.

Check your policy wording and talk to your insurer if you do not understand what you are covered for.

Hydrology is the field of study and expertise that can determine how a home or property was inundated. Insurers will arrange a hydrology report in cases where they need to determine the primary cause of water inundation to make a claim decision.

A ‘Make Safe’ is immediate rectification works to prevent further damage to your property or make the site safe to visit. This may include fitting tarpaulins to your roof or treating debris with an adhesive to prevent the spread of contaminants.

A ‘Make Safe’ may initially be conducted by emergency services, government agency or a contractor appointed by your insurer.

A scope of works is a document that sets out what damage to your property is covered by your insurance policy. The scope of works is a list of home building repair works for your insurance claim. It can help identify and outline what repair or rebuilding work is needed to fix things. It may be used to obtain repair quotes.

Your scope of works is usually prepared by your insurer’s loss adjuster and/or builder or engineer. The scope of works may be developed by visiting or virtually assessing your property to inspect the damage and asking you for information.

If a house hasn’t been well maintained, it is at a much higher risk of being damaged by extreme weather. For this reason, when you apply for insurance, insurers require you to confirm your home is well maintained. If an insurer assesses your home and finds evidence it hasn’t been well maintained and that has contributed to the damage, they may reduce the amount they will pay you or require you to fix the maintenance issue before they repair your home. In some cases, the insurer may deny the claim.

The extent of damage, complexity of your claim and access to labour and supplies will impact how long a repair or rebuild will take. Once your Scope of Work is complete, ask your insurer for a timeline.

A cash settlement is an amount of money your insurer may offer to settle your claim. Insurers can settle some or all of your insurance claim using a cash settlement.

Insurers will explain the basis for the dollar amount of the cash settlement they offer you and provide you with a Cash Settlement Fact Sheet. You are free to get your own quotes to estimate how much it would cost to repair or rebuild your property and provide them to your insurer as part of the cash settlement process.

Common reasons for cash settlements include:

  • it is unsafe to repair or rebuild your home.
  • the local authority will not allow you to repair or rebuild.
  • your insurer can only partially accept your claim. This may be because there is damage to your property that is not covered by your insurance, which first needs to be fixed by you.
  • your insurance does not cover the amount of money it will take to repair or rebuild your home to today’s building standards and it is not possible for your insurer to repair or rebuild your home, having explored available options with you for you to pay the difference.

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Code of Practice
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