The recent floods that ravaged parts of Southeast Queensland and Northern New South Wales are now the nation’s third costliest weather disaster in history, according to new data from the Insurance Council of Australia (ICA).
In the span of four weeks, the bill from insured losses has grown by $500 million to $4.8 billion, reflecting an increase of 11.6 per cent.
Almost 225,000 insurance claims relating to the disaster have been lodged across both states, reflecting an increase of 3.6 per cent compared to last month. Approximately 30 per cent of claims have been closed.
ICA CEO Andrew Hall says insurers are working hard to resolve claims as quickly as possible and have put on hundreds of extra staff to support claims processing.
As claims assessments continue to be completed, insurance costs have grown by 12 per cent compared to last month, driven in part by increasing costs for materials and labour.
“The sheer scale of the extreme weather event that devastated Queensland and New South Wales is something we have never seen before, and the cost continues to rise,” Hall said.
“Money is flowing into these devasted communities with $1.5 billion already paid and this number increasing every day.”
The catastrophic event now trails only behind the Sydney hailstorm of 1999 ($5.57 billion in normalised terms) and Cyclone Tracey in 1974 ($5.04 billion in normalised terms) when it comes to insured losses.
With almost 125,000 home claims stemming from the floods, the ICA noted that local councils need to be prepared for an influx of development applications for the large number of property rebuilds and repairs required.
“Past experience has shown us that local councils need to be looking at what they can do to process the higher than usual number of development applications we expect to see as a result of this flood,” Hall said.
“The time it takes for some property claims decisions to be made has been a consistent issue raised at our policyholder forums in New South Wales and Queensland.
“There are clear obligations and regulations on insurers around claims, but ultimately the type of claim, the assessment required and the complexity of the repair or rebuild can impact that process.”
This week marked four months since the ICA declared the event an insurance catastrophe, which is the same period of time insurers are given to make a decision on a claim under the General Insurance Code of Practice.
However, the code allows for changes to timeframes where they cannot be practically met, for example due to the complexity of the claim or delays in expert reports.
Timeframes stipulated in the code are as follows:
• Insures are obligated provide an update at least every 20 business days after a claim has been submitted.
• A routine enquiry must be responded to within 10 business days.
• Insurers are required to make a decision on a claim within four months of lodgement.
• Changes to timeframes are permitted where they cannot be practically met.
The ICA said many claims were not made until days, weeks or months after the initial event, with locations like Lismore being hit for a second time at the end of March, generating new or additional claim lodgements.
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