Insurance Council of Australia

Media releases

ICA to assist Inglewood policyholders at Recovery Centre

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ICA to assist Inglewood policyholders at Recovery Centre

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News release

Tuesday 7 December 2021

Representatives from the Insurance Council of Australia (ICA) will be at the Inglewood Flood Recovery Centre on Wednesday 8 December to assist policyholders with insurance-related queries.

The flood waters that affected Inglewood homes and businesses last week have receded, leaving damage to property that is currently being assessed by insurers.

The ICA is aware of some policyholder confusion around how policies may respond to flood.

A standard definition of flood was introduced in June 2012 that applies to home and contents, small business and domestic strata-title policies. The standard definition of flood in Australia is:

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.

Flood cover is a standard policy inclusion except where it is expressly stated cover for flood is excluded, for example where an insurer clearly states it does not cover flood, or when an option is provided to ‘opt out’ of flood cover.

Quote attributable to ICA CEO Andrew Hall:

Many people affected in the Inglewood area are seeking an understanding of their insurance policy and how it responds to this severe weather event, as well as the next steps in the recovery process.

The ICA representatives travelling to Inglewood from Brisbane will be available to help with general information around the claims process.

Recovering from a flood

  • Return to your property when emergency services declare it safe to do so.
  • Only enter your property when you are certain you are not at risk.
  • 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 check what your policy includes or excludes and seek guidance on the claims process.
  • You can start cleaning up but first take pictures or videos of damage to the property and possessions as evidence for your claim.
  • Keep samples of materials and fabrics to show the assessor.
  • Remove and discard any water or mud-damaged goods that pose a health risk, such as saturated carpets and soft furnishings.
  • Make a list of each item and include a detailed description, such as brand, model and serial number.
  • Store damaged or destroyed items somewhere safe, don’t throw away goods that could be salvaged or repaired.
  • Speak to your insurer before you attempt or authorise any building work, including emergency repairs, and ask for the insurer’s permission in writing. Unauthorised work may not be covered by your policy.
  • If you are in urgent financial need you can ask your insurer to fast track your claim and make an advance payment within five business days of you demonstrating your urgent financial need. Any advance payment may be deducted from the total value of your claim.

If your claim has been finalised within one month of the disaster, your insurer must give you six months from the finalisation date to ask for a review of your claim (for instance, if you think the insurer has not accurately assessed your loss), even if you have signed a release.

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Insurers welcome release of draft Reinsurance Pool Bill

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Insurers welcome release of draft Reinsurance Pool Bill

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News release

Friday, 3 December 2021

The Insurance Council of Australia (ICA) today welcomed the release of draft legislation intending to establish a reinsurance pool for cyclone and cyclone-related flood for privately-owned homes, strata corporations and small businesses insurance policies.

Following the Government’s announcement of a reinsurance pool in May the sector has engaged constructively with Treasury during its consultation phase.

Insurers will now need to investigate and test how the model will operate to drive down premiums and improve availability for cyclone and cyclone-related flood and we look forward to further engagement with Government over the next two weeks of consultation on the draft Bill.

The 2020 Northern Australia Insurance Inquiry undertaken by the ACCC supported insurers’ pricing practices, finding the main driver of premiums in northern Australia was the higher risk of natural perils like cyclone and cyclone-related flood.

The same inquiry found that in 2018-19 insurers in northern Australia lost approximately $208 million, and over the 12 years from 2007-08 suffered aggregate losses of $856 million in real terms in the region, highlighting the pressure insurers are under to deliver for customers in a way that is financially sustainable.

Quote attributable to ICA CEO Andrew Hall:

Insurers welcome the release of the reinsurance pool draft legislation for review and thank the Government for their efforts to deliver this important next step for a very complex issue.

We recognise that it is one part of the solution to improving affordability and availability of insurance for those living with the threat of cyclones in northern Australia.

Insurers have worked hard for many years in northern Australia to keep premiums affordable and coverage available.

To create a long-term and sustainable market for insurance, more must be done at all levels to lower the physical risks by improving resilience standards in building codes, reform of unfair state insurance stamp duties and levies, and making better land planning decisions into the future that factor in the climate impacts.

We look forward to ongoing work with the Government and the Australian Reinsurance Pool Corporation on the consultation.

 

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Buildings need to be made more resilient to cyclones

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Buildings need to be made more resilient to cyclones

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News release

Thursday, 2 December 2021

A new report released today by the Insurance Council of Australia (ICA) has found that Australia’s houses are not resilient to tropical cyclone hazards, which are expected to become more severe as the climate changes.

Prepared for the ICA by James Cook University Cyclone Testing Station in association with Risk Frontiers, the Tropical Cyclones and Future Risks report outlines the changes required to building codes and construction standards to improve the cyclone resilience of new homes, and calls for greater investment in the retrofitting of old homes to protect property and lives.

The insurance claims cost for tropical cyclones since 1967 stands at $23 billion, and Cyclone Tracy remains Australia’s costliest natural disaster with a $5.5 billion insurance bill (figs normalised to 2017 values).

The report draws on industry-wide policy and claims data from recent tropical cyclones in North Queensland, with a combined claims cost of $3.83 billion, and incorporates the damage report from Western Australia’s Tropical Cyclone Seroja earlier this year.

It finds that unless significant changes are made to both the design method and criteria for new houses the impact and losses from these events in Australian communities will only increase from an already high base.

A key recommendation of the report is that Australia’s National Construction Code considers resilience in all new property construction to reduce the damage, loss and disruption to communities caused by cyclones.

The report also recommends that federal and state governments support the development and expansion of household resilience schemes, such as the now-defunct North Queensland Household Resilience Program, which can help to reduce insurance premiums and better protect householders and communities.

The report is the second in the ICA’s Climate Change Impact Series, and follows a report released last month on the impact of actions of the sea. The final report in the series on flood impacts will be released in coming weeks.

Quote attributable to ICA CEO Andrew Hall:

At present no region in Australia is uninsurable, however if the severity of extreme weather events increases as predicted it is possible some regions may become difficult to insure in the future.

Australia’s modern houses are not resilient to the tropical cyclone hazard of today, and the National Construction Code must consider resilience for all new property construction if we are to keep all of Australia insurable.

Implementation of stronger building codes and retrofitting programs, improved land-use planning, and permanent physical mitigation measures, where necessary, will be key to ensuring an insurable Australia.

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Insurance industry welcomes $50m for flood mitigation

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Insurance industry welcomes $50m for flood mitigation

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News release

Tuesday, 30 November 2021

The Insurance Council of Australia (ICA) has welcomed today’s announcement by Minister for Emergency Management and National Recovery and Resilience, Senator the Hon Bridget McKenzie, of a further $50 million in Federal Government funding for national flood mitigation infrastructure.

Today’s announcement further bolsters funding for infrastructure projects designed to protect Australian communities vulnerable to flood events to $100 million.

The Insurance Council’s long held position is that over the medium to long-term only physical mitigation measures, along with improving building standards and quality and making informed land use planning decisions, will increase protection against flood for at-risk Australian communities.

Insurers have been a consistent voice in advocating for increased funding for both public and private mitigation projects, which is why this additional funding announced today is welcome.

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

Minister McKenzie’s announcement of this extra funding is an important step in protecting Australians homes and businesses, increasing the physical and financial resilience of property and business owners in flood-exposed communities.

We congratulate the Government and Minister McKenzie on today’s welcome announcement and for taking further steps towards improving the resilience of Australian communities.

 

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New report finds $30B needed to protect coastal communities

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New report finds $30B needed to protect coastal communities

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News release

Wednesday, 17 November 2021

A new report released today by the Insurance Council of Australia (ICA) estimates that Australian Governments will need to invest $30 billion in large scale coastal protection and adaptation projects over the next 50 years, as climate change makes coastal communities, property, and infrastructure increasingly vulnerable.

Climate change is driving rising sea levels and exacerbating coastal hazards known as ‘actions of the sea’ such as tidal inundation, coastal and estuarine inundation, coastal erosion, and shoreline movement.

The report, prepared for the ICA by Baird Australia, has found that as these events increase in frequency and intensity, a growing number of exposed properties in Australia will become uninhabitable.

The June 2016 storm that eroded the beach and private land on Sydney’s Northern Beaches is a stark example of this phenomena, with the almost completed mitigating infrastructure costing the local government and homeowners an estimated $25 million.

Insurance cover for actions of the sea is generally not available because of the inherent risks and is further constrained because of the growing risks from climate change impacts.

With insurance largely unavailable, the report recommends building greater protections for communities exposed to actions of the sea through three areas of activity and investment:

  • Investment in coastal protection infrastructure where these can be shown to be economically and environmentally feasible
  • Improved and coordinated data collection by local, state and federal governments to build a comprehensive picture of the scale of the problem
  • Land use planning that considers actions of the sea, including in some cases making difficult decisions about the long-term viability of existing communities or property

The estimated $30 billion investment in large scale coastal protection and adaptation projects over the next 50 years represents just 1.2 per cent of the average yearly infrastructure spending by all local, state and federal governments.

The report finds that with this modest investment significant returns can be realised through avoided damage and financial loss for individuals and avoided community economic loss due to disruption.

However, the Baird report finds there are limits to mitigation and in some cases adaptive management and planned retreat from coastal hazard zones may be the best long-term community option.

The report recommends urgent action by federal and state governments to build a coastal hazard information database to measure and monitor actions of the sea as sea levels rise.

Quote attributable to ICA CEO Andrew Hall:

Legacy planning decisions by Australian governments have left some coastal communities, homes and infrastructure highly vulnerable to actions of the sea like tidal inundation and coastal erosion.

It’s estimated that over the next 50 years governments will need to invest at least $30 billion in large scale coastal protection and adaptation projects as climate change makes actions of the sea worse.

Insurers are generally not able to cover ‘actions of the sea’ because of the nature of the risk, but we can improve protections for communities and property owners by raising awareness of the risks, improving data and understanding, and advocating for investment in mitigation and adaptation projects.

The insurance industry stands ready to collaborate with governments to share our risk intelligence to help mitigate these growing challenges, for example working together to set robust land planning and building codes which play a critical role in reducing risk to property holders and enabling affordable insurance.

The Actions of the Sea summary report is available at Climate Change Impact Series: Actions of the Sea and Future Risks (insurancecouncil.com.au)

 

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Business Interruption court appeal hearing concludes

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Business Interruption court appeal hearing concludes

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News release

Friday, 12 November 2021

The Insurance Council of Australia notes the Full Court of Federal Court of Australia has today concluded hearing appeals in the second business interruption insurance test case.

The Court has reserved its judgment, which is anticipated by the end of the year or shortly thereafter.

Appeals were brought by both policyholders and insurers on a number of issues arising from the judgment delivered by Justice Jagot of the Federal Court of Australia on 8 October 2021. 

Policyholders filed appeals to the Full Court of the Federal Court on five of the test case matters and insurers filed cross-appeals and notices of contention in relation to those five matters. 

Five other matters in the test case involving insurers Chubb, Allianz and Guild were not appealed. 

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

This is an important step towards finalising this matter and we are grateful to the Court for expediting the process so a determination can be reached as soon as possible.

Insurers, including those not directly involved in the court proceedings, are committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims.

 

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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.
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