A levee Charleville can bank on
Mark Milliner, chief executive of Suncorp's personal insurance division, will travel to Charleville on Wednesday to announce customers in the outback town will see average home and contents premiums fall by $400 to about $990, next time they renew their policies.
The reduction follows the completion of a $20 million levee and diversion project that reduced risks of inundation for the town. Without it average premiums would be running at $3000 a year, pricing insurance out of reach of most residents.
Suncorp sparked anger in 2012 when it denied insurance to nearby towns of Roma and Emerald after three major floods in as many years to highlight the heavy costs of not investing in mitigation efforts. Existing customers reportedly complained that premiums had risen as much as tenfold.
"We paid out over $100 million in claims and governments would have paid that much and more," Mr Milliner said.
This year the company said Roma had been discussing the construction of a levee since 2005 with the cost between $2 million and $10 million.
In February the federal government pledged $7 million and the Queensland government $13 million to build a levee at Roma.
The Greens are going to this election pledging to lift annual federal spending on mitigation for floods, fires and other disasters from $50 million to $350 million, with the increase paid for by a levy on thermal coal exports.
Frequently Asked Questions about this Article…
Suncorp is reducing premiums because a $20 million levee and diversion project has cut the town’s inundation risk. The insurer says the mitigation work means insurance costs can be passed on as savings to local customers.
Suncorp says average home and contents premiums will fall by about $400 to roughly $990 when customers next renew their policies following the levee and diversion project.
According to the article, without the $20 million levee and diversion project average premiums would have been about $3,000 a year, which the report says could have put insurance out of reach for most residents.
In 2012 Suncorp refused to offer insurance to nearby towns Roma and Emerald after three major floods in as many years, and existing customers reportedly faced premium increases of up to tenfold—highlighting the cost of not investing in flood mitigation.
Suncorp’s personal insurance division paid out more than $100 million in claims, according to the article. Large claim bills can affect insurer profitability and premiums, so effective mitigation that reduces claims can be important for investors watching insurance sector risk.
The article says Roma has discussed a levee since 2005 with estimated costs between $2 million and $10 million. Recently the federal government pledged $7 million and the Queensland government $13 million toward building a levee at Roma.
The Greens are proposing to increase annual federal spending on mitigation for floods, fires and other disasters from $50 million to $350 million, funded by a levy on thermal coal exports, according to the article.
The article shows that mitigation projects can lower flood risk, reduce insurance premiums, and make insurance more affordable for residents. For everyday investors, that can improve the attractiveness and affordability of property in previously high-risk areas and reduce future insurer claims exposure.
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