Insurer's push to band together on flood alerts
"We want to have a single version of the truth," said Andy Cornish, chief executive of IAG's Direct Insurance division. "I think it's a nonsense - we're all spending millions of dollars to compete against each other."
Even the Insurance Council of Australia's data on risks was patchy, with NSW doing "a much better job" than counterparts in Victoria, Mr Cornish said.
Insured losses from the summer's floods and fires will approach $1 billion, the Insurance Council has said, adding to costly damage bills from floods in previous years. Reinsurers have said they are re-rating Australia after a series of disasters, prompting insurers to pass on the higher premiums to customers.
The Climate Commission on Wednesday warned that global warming was influencing weather extremes, including the past summer's record-high temperatures.
"I'm interested very much in the issue of what the climate's doing and how that may be impacting on how we think of insurance," Mr Cornish said.
One of the government's responses last month to a Productivity Commission report on climate change was to support its calls for improved co-ordination and dissemination of flood-risk information.
Mr Cornish said data must cover other perils, such as storm surge and hailstorms. "Storm surge has not been modelled anything like as sophisticatedly as floods."
Low-lying coastal regions are expected to face increased risk of inundation as sea levels rise and storms become more intense.
Separately, Mr Cornish said his NRMA unit had examined the prospect of introducing vehicle telematics into Australia but found the devices unlikely to appeal to most consumers.
Drivers with such devices in their cars could potentially receive lower premiums if the data demonstrates good driving habits.
One industry analyst has warned that IAG and Suncorp could see their dominance of motor insurance undermined if telematics found a market here.
Compulsory third-party insurance and the availability of insurance for younger drivers meant Australia did not have the same market gaps as some other countries.
Another issue is linking the data collected to an individual driver, while privacy problems have also arisen overseas.
Frequently Asked Questions about this Article…
IAG's Direct Insurance chief Andy Cornish says insurers are spending millions duplicating hazard research and would prefer a single, public source of flood-risk data. He argued a government‑pooled dataset would stop insurers competing by re‑creating the same information and provide a 'single version of the truth'.
The article notes existing data is patchy. Even Insurance Council of Australia information varies state by state, with New South Wales doing 'a much better job' than Victoria, according to Andy Cornish. That inconsistency is part of why insurers want coordinated, public datasets.
The Insurance Council has said insured losses from the summer's floods and fires will approach $1 billion. Reinsurers have been re‑rating Australia after a run of disasters, which has prompted primary insurers to pass higher premiums on to customers.
The Climate Commission warned global warming is influencing weather extremes, including record temperatures. IAG’s Andy Cornish said he’s closely interested in how climate trends affect insurance modelling and risk — an important consideration for investors watching insurers' future claims and pricing.
Cornish highlighted that data should cover storm surge and hailstorms as well as floods. He noted storm surge, in particular, hasn't been modelled as sophisticatedly as floods, and rising sea levels plus more intense storms increase inundation risk for low‑lying coastal regions.
IAG’s NRMA unit examined introducing telematics but concluded the devices were unlikely to appeal to most Australian consumers. The article notes telematics could allow drivers with good habits to receive lower premiums if the data supports it.
An industry analyst warned that if telematics found a market in Australia it could undermine the motor‑insurance dominance of firms such as IAG and Suncorp. However, the article also points out Australia’s compulsory third‑party system and insurance availability for younger drivers mean market gaps seen overseas are less pronounced here.
Yes. The article says a key challenge is linking collected telematics data directly to individual drivers, and notes privacy problems have arisen in overseas telematics programs, suggesting similar concerns would need addressing in Australia.
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