Insurance Council of Australia Takes New Initiatives in Wake of Floods

The Insurance Council of Australia (ICA) has reacted quickly to the disastrous flooding in the State of Queensland earlier this month with two new initiatives aimed at “developing a more effective and sustainable response to disasters in Australia.”

On Thursday the ICA released a “10 Point Plan to Tackle Disasters,” and today it announced the establishment of “an expert panel of independent hydrologists to support policyholders and speed up the claims process.”

The ICA listed the 10 key objectives of its plan as follows:
1. Standard definition for flood
2. Improved disclosure
3. Provision of adequate flood data
4. Removal of insurance taxes
5. Improved land-use planning
6. Improve building standards
7. Improve community infrastructure
8. Education and financial literacy campaign
9. Measure effectiveness of disaster relief payments
10. Better advice to consumers

However, ICA CEO Rob Whelan warned that “there is no simple, single solution to the flood insurance debate. It requires the development of a national policy approach to better deal with a number of challenges presented by floods in those communities at-risk.”

He called for a “meaningful national dialogue” with the government in order to develop “more effective and sustainable responses to disasters in Australia, specifically flood.” The 10 point plan sets out the ICA’s priorities for engaging in those discussions.

Whelan also pointed out that he was reiterating the “position of the general insurance industry – that a flood levy may have unintended consequences – creating a moral hazard and encouraging fewer people to take responsibility for their own risks through purchasing appropriate insurance products.”

The ICA’s bulletin also made clear that it “does not support the concepts of mandatory flood insurance or a national insurance pool for natural disasters. Both serve to distort the private sector insurance market and will result in people who have zero or extremely low levels of risk paying higher premiums to support those living in high risk areas.”

The ICA also stated that, while it recognizes that disaster relief for the “re-building of infrastructure is needed; it should only be conducted hand in hand with reforms to encourage greater take-up of private insurance.”

The ICA noted that in carrying out its purpose the expert panel of independent hydrologists would be “working closely with local government flood plain managers and state agencies to provide greater clarity and transparency when assessing the nature of the flood as it occurred across the state.”

Whelan explained that the “limited supply of hydrologists in Australia has the potential to slow down claims processing following the QLD floods potentially causing a direct impact on flood victims seeking to make a claim.”

“The independent Hydrologists Panel engaged by the ICA will prepare plain English reports describing the causes, nature and severity of flooding that has occurred in QLD. These reports will describe the inundation at a high level for each major town and region and will be made available to policyholders.”

The ICA added that the “reports will not be binding on insurers with regard to the individual determination of claims and will not prevent policyholders from accessing their own hydrology resources. The independent reports will simply provide an additional information resource to residents and insurers alike.”

The insurance industry is funding the Hydrologist Panel at no extra cost to policyholders accessing these reports.

Source: Insurance Council of Australia