Insurers are “freaking out” about what the summer will bring as they continue to struggle with more than 230,000 claims from the east coast floods earlier in the year.
Insurance Council of Australia (ICA) chief executive Andrew Hall told insuranceNEWS.com.au that the reinsurance period for the event has been “extended” to 14 months as insurers are working “over the top” due to the number of claims and issues being reported. chains and business opportunities.
The Bureau of Meteorology says there is a 70% chance of a third La Nina in a row developing this year, which could lead to more flooding.
Mr. Hall, speaking as the ICA released two major reports on natural disasters, said reports of smaller incidents that do not get the headlines are adding to those that come from declared disasters.
“They’ve all been adding to the workload. The system is in full swing right now.
“That’s why we’re in such a critical situation. We’re about to enter the next spring/summer season and La Nina is coming on strong.
“So it’s fair to say that the business is risky for what’s coming and trying to plan for it all.
“The rivers are full. It doesn’t take much to start another event, whether it’s big or scary, somewhere around the east coast and everyone is on high alert. “
The latest figures put the flood disaster as Australia’s second worst disaster, in terms of insured losses, with 233,000 claims worth $5.28 billion. 44.1% of claims have been closed but 129,000 are still outstanding.
Mr Hall says it has “been a very difficult recovery process” with the rebuilding time reaching 14 months.
“We know that we have to manage the expectations of the customers and the expectations of the people at this time,” he said.
And while many challenges have plagued insurers, he believes lessons are still being learned.
“Each event provides lessons to be followed and acted upon [should be] it was changed accordingly,” he said.
“One of the things that has come out of this flood is how we work with local governments on short-term housing.
“Governments have done things like protecting many temporary houses. The new thinking is that the site could be located in a residential area where services such as water and sanitation are available, rather than trying to create entire walkable villages for people to live in.
“Things like this would eliminate the need for temporary shelters and ensure that they are freed up for anyone who needs them, and create business in the area.”
Mr Hall said technology could play a role in improving insurers’ communication with customers.
“I think technology is the solution,” he said.
“Insurers have a lot of responsibilities in terms of how they communicate with customers and they’re trying to get them all right.
“People are very worried and they are worried about when they will start rebuilding.”
“Sometimes it’s frustrating when a customer receives an update only to find out there are no updates. That’s right and it’s something I know many insurers spend a lot of time and effort on. “
Mr Hall adds that the acquisition and rebuilding process in Queensland and NSW is adding to the challenge.
“Customers are wondering if they can benefit from government policies and if it will change the way they build the house or sell it to the government,” he said.
“There’s no point in rebuilding a building if you know the government can buy it and tear it down, or you can get extra money to upgrade it or something like that.
“I am not against these programs because they all have good intentions. But they are big programs for governments to implement – they are big and they will take time.
“I think the problem is that it’s happening regardless of the time it’s happening with insurers trying to close claims. There’s a problem that needs to be better managed.”
The reports released today by the ICA summarize the effects of disasters in the last financial year, as well as repeating the message of the companies about the increase in the use of energy, the better planning of the land, and the need for changes in insurance taxes.
Research by think tanks the McKell Institute shows that weather events in the past 12 months cost each Australian household an average of $1532.
The Cost of Extreme Weather report also shows that over the past 10 years, the average annual household cost of extreme weather has been $888, but this figure is expected to rise to $2500 a year by 2050.
Also released today is the ICA’s second Insurance Catastrophe Resilience Report, which uses insurance data to review the past 12 months of extreme weather events and recommend changes to mitigate the effects of future events.
Reports show that as of 2005, Commonwealth spending on disaster relief was $24 billion while disaster relief spending was $500 million – or about 2% of total spending.
By 2050, Australian households will pay $35.24 billion each year (in 2022 dollars) in direct costs of extreme weather.
In the 2021/22 financial year, insurers paid out $6.41 billion from more than 380,000 claims for multiple events, which was $3.9 billion more than in the previous 12 months.