Insurance Council of Australia

Disaster & catastrophes

New data shows historic catastrophes would have greater impact today

by

New data shows historic catastrophes would have greater impact today

News release

Wednesday, 12 September 2023

New data released by the Insurance Council has revealed that the cost of both the 1999 Sydney Hailstorm and Cyclone Tracy would far outstrip last year’s record-breaking flood if they happened today.

  • The Sydney Hailstorm, which caused $1.7 billion in insured losses when it rained cricket-ball-sized hailstones on the city in April 1999, would result in an estimated $8.85 billion in insured losses if it happened in 2023.
  • Cyclone Tracy, which killed 71 people and caused $200 million in insured losses when it struck Darwin on Christmas Eve 1974, would cause an estimated $7.4 billion in insured losses in 2023.
  • The 2022 South-East Queensland and New South Wales Floods cost $6 billion in insured losses and remain the costliest extreme weather event in our history.

The new data, calculated by Australian catastrophe modelling firm Risk Frontiers, uses methodology that normalises the losses of past insurance catastrophes to account for inflation, changes in property numbers and values, and stricter building codes, enabling insurers, reinsurers, governments, and other policymakers to better understand the likely impact of future extreme weather events.

The changes in estimated insured losses for the historic events is due to the increase in people and property across Australia, particularly in large population centres, underscoring the need for greater investment in measures to make at-risk communities more resilient to extreme weather.

Risk Frontiers has also provided updated data on historic insurance catastrophes adjusted for inflation only, allowing a comparison of actual insured losses from events over the last half century.

The new data is included in the ICA’s annual Insurance Catastrophe Resilience Report, which also examines the most pressing issue currently facing the Australian insurance industry and its customers – affordability and availability – and the clear link between risks and costs.

The report calls for increased investment in resilience and mitigation measures as part of an ongoing program to reduce risk and cost pressures, the end of development on floodplains, the broadening of home buy-back schemes to move people out of danger, improved building codes to make buildings more resilient, and reform of state taxes on insurance products to provide immediate cost relief.

Comment attributable to Insurance Council of Australia CEO Andrew Hall:

The financial impact of insurance catastrophes over the past 12 months was around one fifth of the cost of the previous record-breaking year, but more benign weather conditions should not provide false hope that the issues of worsening extreme weather risk have gone away.

This new data shows that when – not if – extreme weather events strike large population centres in the future we can expect them to have a greater impact and be more costly, making the case for risk mitigation even more pressing.

We can’t wait until disaster strikes, we need to act now by investing more to make communities more resilient, reform land-use planning and building codes and, in some cases, move people and homes out of danger altogether.

Read Full Report here

Useful links

icon 2022-23 Catastrophe Resilience Report
icon Media Release PDF
icon Ducimus qui blanditlls

ICA Statement – 19 August 2023

by

ICA Statement - 19 August 2023

image

Saturday 19 August 2023

Insurers paid out $36.5 billion in claims last year, helping millions of Australians recover from the unexpected. Insurers are committed to ensuring products and services provided to customers are of a high standard and are consistent with regulatory obligations and community expectations.

Because of a series of very significant extreme weather events since the Black Summer bushfires the sector and its customers have experienced several very challenging years. In 2022 alone, there were more than 300,000 disaster-related claims lodged from four declared insurance events across the country, costing more than $7 billion in insured losses.

At the same time, in response to the Financial Services Royal Commission insurers have upgraded systems and processes and improved the way they engage with customers. This has resulted in better capacity to address customer issues and work more closely with regulators in ensuring improved customer outcomes.

We acknowledge there is more work to be done, which is why in April we commissioned Deloitte to undertake an independent review of how insurers responded to last year’s floods. This review predated the recently announced Parliamentary inquiry and will feed into that process, which we look forward to participating in.

Given the critical nature of insurance, it is vitally important that Australia has a robust and profitable insurance sector to help families, businesses, and communities get back on their feet.

Insurer profits are cyclical and often impacted by factors outside of the control of the businesses, including extreme weather events. Insurers faced historically low profits in 2020, 2021, and 2022, and recent improvements in profitability, largely due to a significant turnaround in investment returns and improvements in some commercial lines, should be seen in that context.

Persistently high inflation and significant increases in reinsurance costs are continuing to increase costs for insurers into 2023. Home insurance is under particularly significant pressure – for every dollar collected in home premiums in 2022 insurers' costs were $1.04.

The sector has appreciated the opportunity to work more closely with ASIC to develop a clearer understanding of their view of specific obligations for general insurers. We note that the recent interim stop orders on some lines of pet insurance were in place for less than 24 hours, following immediate engagement from affected businesses with ASIC to make amendments to certain documents. The sector was pleased to see these interim stop orders lifted so quickly.

Insurers must carefully calibrate costs through volatile weather periods to ensure the product remains in reach of as many Australians as possible. We note ASIC’s recommendation on resourcing and will engage further with the regulator to understand what level of permanent claims staffing they consider appropriate, given that any ongoing increase will be a cost that is ultimately borne by customers.

Suggested Links

Our Role
icon Ducimus qui blanditlls
icon Ducimus qui blanditlls

Insurers make third visit to flood-impacted towns in Central-West

by

Insurers make third visit to flood-impacted towns in Central-West

image

News release

Wednesday, 26 July 2023

The Insurance Council of Australia (ICA) and insurers will be in Eugowra and Molong in August to assist flood-impacted communities with their insurance claims.

Since the flood that hit the region in November last year more than 14,250 claims totaling approximately $222 million have been lodged, including 6,878 home property claims, 4,200 home contents claims and 798 motor vehicle claims.

Seventy-seven per cent of all claims from this flood event are now closed, which is above trend for closure rates of events of this type.

The consultations will be the third time the ICA and insurers have undertaken in-person engagement since the November floods.

The in-person customer meetings are an opportunity for customers to discuss their claim, and to work through any issues they may be experiencing with their insurer at a time that suits.

Policyholders from surrounding areas are also encouraged to book an appointment.

Event details

Molong

  • Where: Molong RSL, 22-24 Riddell Street, Molong
  • When: Wednesday 9 August
  • Time: 10am – 6pm

Eugowra

  • Where: Eugowra Bowls & Recreation Club, 5 Hill Street Eugowra
  • When: Thursday 10 August
  • Time: 10am – 6pm

To check appointment availability and to book, visit:  www.insurancecouncil.com.au/Bookings 

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

The devastation left behind from the floods in Central-West of NSW in November last year continues to be felt.

Giving insurance customers in regional communities the opportunity to speak to their insurer in-person is vitally important to the recovery process, and insurers continue to visit the region as the recovery continues.

The Insurance Council will continue to advocate for greater investment in mitigation and resilience for these communities, including extending buy-back programs for homes that are at extreme risk of future flooding.

Useful links

icon Insurers make third visit to flood-impacted towns in Central-West
icon Lorem ipsum
icon Ducimus qui blanditlls

Insurance Council welcomes Budget measures for extreme weather resilience

by

Budget funding for disaster resilience and early response welcomed

image

News release

Tuesday, 9 May 2023

The Insurance Council of Australia (ICA) welcomes funding in the 2023-24 Budget to improve emergency early warning systems, a measure backed by analysis conducted by actuarial consultancy Finity in a 2022 report for the Insurance Council. 

However, the ICA continues to call on the Government to lock in longer term funding to deliver on its intention for the DRF to be an enduring fund that delivers resilience and mitigation to Australians. 

The ICA also welcomes the 10-year funding provided to remediate high priority flood warning infrastructure and address critical reliability risks. 

The ICA looks forward to continuing its work with the Federal Government on the Hazards Insurance Partnership (HIP) which will inform future investments of the Disaster Ready Fund (DRF), and outline a natural hazard risk database for Australia, both initiatives that we strongly support.  

The Insurance Council’s Budget submission called for DRF funding to be extended to a 10-year rolling program, which would ensure that Australians receive the benefits of resilience and mitigation investment for years to come and allow governments and communities to plan for long-term projects that put downward pressure on insurance premiums. 

This funding should also be indexed so it does not continue to fall in real terms. A 10-year, indexed program would cost the budget approximately $2.5 billion over the medium term, $1 billion less than the cost of disaster recovery payments and allowances in 2022 alone.  

The ICA also welcomes the Government’s commitment to introduce legislation to ensure tax law is aligned with accounting standards and minimise the regulatory burden on general insurers. 

The Insurance Council looks forward to continuing to work with the Commonwealth to develop positive policies to improve the affordability and availability of insurance, and address disaster mitigation, land use planning, building codes, risk mitigation programs, data investment, cyber security, and regulatory reform. 

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

With households grappling with cost-of-living pressures, reducing the physical risks to homes and communities is critical for taking pressure off insurance costs. 

We know that communities across the east coast are still recovering from the floods in 2022, which were the costliest in history, so it is welcoming to see the Government continue its commitment to fund disaster resilience and measures to protect Australian communities from extreme weather. 

However, with claims costs from last year now hitting nearly $7 billion, much more will need to be done soon. We call on the states to also share the heavy lifting in resilience and mitigation funding. 

Insurance is a critical safeguard against extreme weather events and the Insurance Council is steadfast in its advocacy to see significant and ongoing investment in measures to reduce risk, protect communities and ultimately, reduce insurance premiums for households and businesses. 

We look forward to working constructively with the Federal Government and other stakeholders, including regulators and the business community, to see a more resilient Australia. 

Useful links

icon Media Release
icon Lorem ipsum
icon Ducimus qui blanditlls

Independent Review Recommends Improvements To The Motor Vehicle Insurance And Repair Industry Code Of Conduct

by

Independent Review Recommends Improvements To The Motor Vehicle Insurance And Repair Industry Code Of Conduct

image

News release

Wednesday, 10 May 2023

The Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct Committee (CAC) has received Dr Michael Schaper’s final report on the independent review of the Motor Vehicle Insurance and Repair Industry Code of Conduct (the Code).

The report provides 15 recommendations in response to the review’s terms of reference which focused on:

1. The effectiveness of dispute resolution processes under the MVIRI Code
2. Awareness and accessibility of the Code
3. Compliance with the Code
4. Governance of the Code and the CAC
5. Other issues pertinent to the effective governance and operation of the Code

Dr Schaper said the review has also highlighted the importance of the motor vehicle insurance and repair industry to the broader community.

“A thorough review of the code is important because we are in a time of significant change. The Code is mandatory in New South Wales and South Australia, and a review of the Code by the Tasmanian Government is underway”

A range of stakeholders were consulted in the review process, including government bodies, regulators such as Small Business Commissioners, members of the Code Administration Committee, as well as the insurance and repair industry.

The CAC will now work with its membership bodies to review Dr Schaper’s recommendations.

Since its inception in 2006, the MVIRI Code of Conduct has undergone multiple reviews to ensure it remains fit-for-purpose, with the last review undertaken in 2017.

Motor vehicle repairs are the largest single insurance claim for Australian consumers, with 1.76 million smash claims in the 2020-21 financial year alone.

In December 2022, the CAC announced Dr Schaper was appointed to conduct an independent review of the Code.

The MVIRI Code Administration Committee acknowledges and thanks Dr Schaper for his work in delivering the review.

A copy of Dr Schaper’s report can be found on the Motor Vehicle Insurance and Repair Industry Code of Conduct website at www.abrcode.com.au/resource-centre as well as the MTAA website www.mtaa.com.au and the ICA website at www.insurancecouncil.com.au.

Contact:
MVIRI Chair Stephen Jenkins
Phone: 0447 094 126
Email: www.abrcode.com.au/contact-us

Useful links

icon Media Release
icon Lorem ipsum
icon Ducimus qui blanditlls
The voice for a resilient Australia

We are the representative body of the general insurance industry in Australia, shaping positive outcomes for our members, our people and the community.

Subscribe to our newsletter

Acknowledgement of Country

We acknowledge the Traditional Owners on the many lands the people of the ICA reside and work. We respect and honour Aboriginal and Torres Strait Islanders Elders past, present, and emerging.
Read on

Footer

Social