Insurers are under increased scrutiny to deal appropriately with cyclone victims, especially in the lead up to the federal election and in the wake of their poor handling of the 2022 floods.
Prime Minister Anthony Albanese led a chorus of criticism on Monday, saying he agreed insurance companies were “ripping us off” and warned them the federal government would hold the industry “to account”. Queensland Premier David Crisafulli said he was prepared to call out insurers who did not pay out claims or hike up premiums in response to ex-tropical cyclone Alfred.
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“This is a time where they need to do a bit to repair their relationships with the Australian public by doing the right thing and making payments immediately for people who are eligible,” Albanese said on Seven’s Sunrise program on Monday morning. “That’s what people expect.”
Crisafulli said he was concerned about rising insurance premiums for Queenslanders who “paid a lot of money to the insurance industry”, and that the organisations owed it to customers to be “good corporate citizens in someone’s hour of need”.
Treasurer Jim Chalmers, who met with insurers before the cyclone hit landfall, will speak with industry chiefs later this week once the extent of damage was ascertained.
Tropical Cyclone Jasper, which was the last cyclone to hit Australia in 2023, cost $409 million from 10,500 claims, but the damage was relatively confined to northern Queensland, which is not as densely populated as the state’s south-east. There were about 2 million houses, and 4.5 million people, in the path of Cyclone Alfred.
Suncorp, which has the largest market-share in Queensland, said as at 11am on Sunday, the insurer had received more than 1200 claims, including 1100 for home and 55 for motor.
A large tree blocks a road in Brisbane’s CBD after strong winds and heavy rains from ex-tropical cyclone Alfred on Sunday. Credit: Dan Peled
Batch said NRMA teams had been on the ground in South East Queensland and the Northern Rivers region of NSW since Saturday and had conducted 23 emergency repairs at the weekend mainly in the affected NSW towns. She said the insurer had about six mobile branch and support centres customers could visit.
Of 1000 claimants, only two have been moved into temporary accommodation because the cyclone damage rendered their property uninhabitable, Batch said.
“We’ve done a lot of learning since [the 2022 floods] and we’re very prepared for this event, and doing everything we can to make sure our customers get the service they deserve,” the NRMA chief said in response to Albanese’s criticism of the industry.
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“A really important thing is making sure that across the country we’re focused on resilience. We’re looking at – whether it’s government, business or community – making sure we are advising customers to make their homes more resilient, mitigation activities and there aren’t homes in places they shouldn’t have been built.”
As damage and subsequent flooding becomes more apparent, the perennial problem of underinsurance is likely to arise again as consumers may not be aware they are not fully covered, according to insurance industry consultant John Trowbridge.
“The statistics suggest 10 per cent or more are underinsured, and that is rising, but it would be very uneven across the country because where flood risk is involved, or cyclone or other high-risk situations, the premium is very high and people will not insure or may go underinsured deliberately,” Trowbridge said.
“Price increases limit take-up of full insurance, so what is the government going to do? There is a lot more attention on this now and recognition by the wider community that something needs to be done.”
The Insurance Council Australia has estimated that of 225,000 homes in the highest flood risk locations across the country, less than a quarter have flood cover, compared to an estimated 60 per cent nationwide. The council said the low levels of flood cover in those areas were “certainly influenced” by the significantly higher costs. The flood component of annual premiums is more than $7000 and in some cases exceeds $30,000.
The council wants the federal government to invest $30 billion over the next decade to improve mitigation, such as building flood levees and dams, and buying back houses in the highest risk areas.
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