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Australia’s biggest home and contents insurers are not abandoning communities at high flood risk, despite suggestions from critical mainstream media headlines.
“Insurance council exposed as abandoning flood victims,” read a Daily Telegraph headline today, and the story of a resident of Forbes, NSW, was covered by the newspaper and the ABC. (The title was later changed.)
The resident’s insurer, Budget Direct, refused to renew insurance on her home in May, and the homeowner says she was unable to obtain new flood protection before Forbes flooded and damaged her property.
But Budget Direct’s parent company, Auto & General, has confirmed that it sometimes refuses to renew based on updated flood mapping, which industry sources say is done at the individual property level, not by city or region. Underwriters ‘red-line’ risk areas.
Temporary bans on the new card are common in flood-prone areas, and due to persistent La Niña conditions, many zip codes have been subject to prolonged bans this year.
However, even if there is a ban, if there is no change in the policy, the insurer will not usually refuse to renew.
“None of the majors stopped providing cover,” said a source. “We didn’t stop at Lismore to provide cover, so why should we stop at Forbes? Flood cover can be expensive, but it’s available.
The “lie” cited by the Daily Telegraph is based on an earlier Insurance Council of Australia (ICA) assertion that “no one is currently issuing these notices of refusal to renew”, which the newspaper says is contrary to Budget Direct. Customer experience.
The ICA says Forbes is a high-risk area for flooding and emphasizes the importance of mitigation measures such as levees and floodways.
“Claims that insurers put profits before people are not true, and insurers continue to support customers above and beyond the terms of their policies,” an ICA spokesperson told insuranceNEWS.com.au today.
“For example, one insurer increased the temporary accommodation allowance for Ugovra customers and reset the start date for this allowance.
“Other insurers are also offering a variety of gratuities to customers who don’t have flood coverage and/or extend temporary shelter arrangements to those who don’t necessarily qualify for these payments under the terms of their policies.”
The spokesperson also highlighted claim costs related to home insurance.
“Housing policies delivered a gross loss rate of 111% in NSW in the 12 months to September 2022. That is, for every $1 collected in premiums, $1.11 was paid in claims. These figures do not take into account insurers’ costs and overheads.
“According to APRA data, insurers across Australia indemnified $250 million on home policies in the 12 months to September 2022. This mirrored the prior 12 months, which showed a similar underwriting loss of $315 million.
A spokesperson for Budget Direct told insuranceNEWS.com.au that updated flood mapping is being obtained “as part of our normal underwriting processes”.
“These updates will lead to a small percentage of addresses changing from acceptable to no longer acceptable.
“The application of these changes is limited to individual addresses and not to a city or region.
“As part of our response to the recent flooding in the Forbes area, we contacted all of our insured customers in advance to check that they were OK.
“We are in the process of managing several claims in the area and continue to have representatives in the area.”
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