* * *
Table of Contents
2020-21 Insurance Catastrophe overview...06
Cat 213: Cyclone Seroja...14
Cat 214: Victorian storms & floods...16
Black Summer recovery update...18
The policy response...20
* * *
Late last year the
The ICA's Insurance Catastrophe Resilience Report: 2020-21 contributes to this discussion by clearly outlining the significant impact of natural disasters on communities across four states over an eight-month period. Importantly, this report also articulates the policy responses required by governments and the operational adjustments required by the insurance sector to better meet the challenge of natural disasters in the future.
In 2013, the Australian Business Roundtable for Disaster Resilience and Safer Communities White Paper found that targeted investment of
In a more recent report, the same group estimated the total economic cost of natural disasters would average
The 2021-22 Federal Budget provided
Some states have also begun to step up their investment in this area - most notably additional resilience funding in the 2021-22
As the Insurance Catastrophe Resilience Report makes clear, the impact of natural disasters on insurers' customers has a very real cost that is both financial and emotional. Recovery from any natural disaster takes money, time and energy; we need to do everything we possibly can to reduce the outlay of these precious resources for the benefit of policyholders and the community.
* * *
While it is difficult to measure the level of underinsurance in
In some cases, insurers have no option but to offer a cash payment rather than reinstate what has been damaged or destroyed because the level of insurance the policyholder has chosen to take out will not cover the cost of a repair or rebuild. This leaves the policyholder to make up the difference, or in some cases walking away from a property they cannot afford to rebuild.
Insurers provide tools such as online calculators to help estimate the sum insured, but the customer may decide to insure at a lower sum as a form of self-insurance or may not accurately estimate the replacement value of their property.
Underinsurance is also driven by stamp duty on insurance, a retrograde revenue measure that numerous inquiries and reviews have found leads to household underinsurance or non-insurance. Government taxes and charges can range from 20 to 40 percent on top of the cost of the premium, depending on the state or territory.
Statistics clearly show that the level of taxes imposed on insurance correlates to the rate of underinsurance and non-insurance. For example, because of its Emergency Services Levy state taxes on insurance in
* * *
The full report can be viewed at https://insurancecouncil.com.au/wp-content/uploads/2021/09/ICA008_CatastropheReport_6.5_FA1_online.pdf
TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact