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…
A senior IAG executive, Andy Cornish, says Australian insurers are wasting millions gathering duplicate hazard data and want a single, government‑pooled version of the truth. They believe publicly available, coordinated flood‑risk information would stop insurers competing to collect the same data and improve consistency in risk assessments.
More consistent, government‑coordinated flood and hazard data could lead to more accurate risk modelling and pricing by insurers. The article also notes reinsurers have been re‑rating Australia after recent disasters, which has already prompted insurers to pass higher reinsurance costs on to customers as increased premiums.
The Insurance Council has said insured losses from the summer's floods and fires will approach $1 billion, adding to costly claims from earlier flood events.
Re‑rating means reinsurers are reassessing and often raising the cost of covering disaster risk in Australia after a run of events. That raises insurers' reinsurance costs, which insurers may pass on to customers as higher premiums — a factor that can affect insurer revenue, margins and investor returns.
Yes. Andy Cornish said data needs to cover other perils such as storm surge and hailstorms. He warned storm surge hasn’t been modelled as thoroughly as floods, even though sea‑level rise and stronger storms increase inundation risk for low‑lying coastal areas.
The government recently backed recommendations from a Productivity Commission report to improve co‑ordination and dissemination of flood‑risk information, supporting the idea of better centralised data and public alerts.
IAG’s NRMA unit looked at telematics but found the devices unlikely to appeal to most consumers. While telematics can deliver lower premiums for drivers whose data shows good habits, an industry analyst warned that if telematics did find a market here they could challenge the dominance of incumbents like IAG and Suncorp. The article also flags practical issues such as linking data to individual drivers and privacy concerns.
The Climate Commission warned global warming is influencing weather extremes, including record summer temperatures. Andy Cornish said he’s interested in how climate change may affect insurance thinking — implying that more frequent or severe weather events can increase claims, influence risk modelling and affect insurer costs and pricing.
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