Tide turns for insurers
TWO of Australia's biggest insurers expect to introduce full flood cover by early next year, substantially boosting the number of households that will have automatic protection from a full range of natural disasters.
TWO of Australia's biggest insurers expect to introduce full flood cover by early next year, substantially boosting the number of households that will have automatic protection from a full range of natural disasters.Coming after a backlash directed at the industry after summer's devastating floods in Queensland, Insurance Australia Group and Suncorp aim to have full flood cover as an option in all 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, regardless of their risk of living in a high-risk zone.At present, a little more than half the insurance policies bought in Australia provide automatic cover for flood, with some policyholders caught out by not being covered for flooding as a result of rising rivers or creeks.As submissions were handed over to the Natural Disaster Insurance Review, private insurers called for greater efforts to prevent floods hitting residential areas.The review was launched by the Gillard government in response to the flooding disasters that hit Queensland earlier this year.IAG chief executive Mike Wilkins urged caution when it came to the government stepping in to provide a solution to flood insurance."We don't think there's been a systemic failure of the insurance market here,"Mr Wilkins told BusinessDay.Suncorp's head of personal insurance, Mark Milliner, said: "There should be mitigation rather than subsidisation of the flood problem."Flooding regularly hits 7 per cent of residential addresses in Australia, causing about $450 million in annual damages, according to Insurance Council of Australia figures.About $110 million has been spent on disaster mitigation by Canberra over the past four years,although insurers argue more should be done, givena small proportion wasspent 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.The council rejected proposals for the introduction of a government-backed insurance pool to cover flood risk, arguing this would be an expensive and complex exercise.The council said that some home owners in high flood-risk areas should be given some form of government-backed subsidies to help thempay for their insurancecosts.The review is scheduledto present its final reportto the government by theend of September.