Big two to introduce full flood cover
TWO of the nation's biggest insurers expect to introduce full flood cover by early next year, substantially boosting the number of households that will have automatic protect from a full range of natural disasters.
TWO of the nation's biggest insurers expect to introduce full flood cover by early next year, substantially boosting the number of households that will have automatic protect from a full range of natural disasters.Coming after a backlash directed at the industry following last summer's devastating floods across Queensland, Insurance Australia Group and Suncorp are aiming to have full flood cover as an option across all of their brands.The move is partially aimed at heading off the prospect of the government stepping in and forcing insurers to offer flood cover to all customers, including those living in high-risk zones.A little over half of the insurance polices now bought in Australia provide automatic cover for floods, with some policy holders caught out by not being covered for flooding caused by rising rivers or creeks. Suncorp now offers automatic cover across some, but not all, its brands.The industry yesterday presented a unified front as a raft of submissions were handed over to the Natural Disaster Insurance Review, with private insurers calling for greater efforts to be made in preventing floods from hitting residential areas. The review was launched by the Gillard Government in response to the flooding disasters that hit Queensland earlier this year.The IAG chief executive, Mike Wilkins, urged caution when it came to the government's stepping in to provide a solution to flood insurance, declaring the system was not broken."We don't think there's been a systemic failure of the insurance market here," Mr Wilkins told BusinessDay. "There is a market-based solution for flood cover to be implemented. The way in which that cover has grown in terms of availability over the course of the last four years demonstrates there is a viable market for this [insurance] out there."The head of personal insurance at Suncorp, Mark Milliner, said: "There should be mitigation rather than subsidisation of the flood problem. The objective should be having less Australians living in flood-prone areas within the next 10 years."Flooding regularly hits 7 per cent of residential addresses in Australia, causing some $450 million in annual damages, according to Insurance Council of Australia figures.About $110 million has been spent on disaster mitigation by the federal government over the past four years, although insurers argue more should be done given that just a small proportion was spent on protection from floods."A repeat of 2011 flooding, damaging the same homes, will be a failure of mitigation, not a failure of private market insurance," the Insurance Council of Australia said in its own submission.The ICA also rejected proposals for the introduction of a government-backed insurance pool to cover flood risk, arguing this would be expensive and complex. It said some homeowners in high-risk areas should be given some form of government-backed subsidies to help pay for their premiums.The review is to present its final report and recommendations to the government by the end of September.