Flooded with problems After a benign summer severe floods have elevated concerns about cover affordability, land-use planning and disaster impacts By Wendy Pugh
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oliticians were fast out of the blocks in warning insurers against being “tricky” and calling for “a bit of humanity” as floods inundated parts of eastern Australia, in a sure sign they expect issues from the disaster to remain hot topics well after the waters recede. Homes and businesses on the New South Wales midnorth coast and in the Hawkesbury-Nepean Valley west of Sydney took the brunt of the mid-March catastrophe, which was also declared for southeast Queensland. Claims totals had reached $500 million by early this month and are likely to top $1 billion based on less extensive impacts from an east coast low last year and the Townsville floods in 2019. NSW Premier Gladys Berejiklian described the inundation as 1-in-100-year flooding in parts of the state while terming the impact west of Sydney as a 1-in-50year event. The catastrophe, following the Black Summer bushfires a year before, has generated similar concerns about insurance affordability and lack of cover, while also presenting issues specific to the peril. That includes questions about the way flood cover is offered and claim tensions over whether storm or other inundation caused damage. Sydney’s urban expansion in the affected Hawkesbury region is also adding heat to the debate
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about why poorly planned development keeps putting people in danger of such events and how the risks can be reduced. Australian Financial Rights Legal Centre Director of Casework Alexandra Kelly says early feedback suggests there will be confusion over whether damage in specific instances is covered and it’s likely some people will have chosen not to take out flood cover due to cost or lack of availability. “For bushfires you either did or didn’t have insurance, rather than the specific event of bushfire being excluded,” she tells Insurance News. “The fact that some people are just not covered for flood will have an impact.” The insurance industry adopted a standard flood definition after the 2011 Brisbane disaster, describing it as the covering of normally dry land by water that has escaped or been released from the normal confines of lakes, natural watercourses, reservoirs, canals or dams. But often claims have elements of damage from both storm and flood, and assessments of the causes after combined events keep hydrologists busy and sometimes require Australian Financial Complaints Authority dispute resolution. Depending on the insurer, the brand and the location, flood may be a compulsory part of household
