Almighty Flood Claims Catching Out Insurers
FLOODING in Bundaberg shocked more than locals – even insurers offering cover for such inundation were caught out.
It struck last month, with the coastal Queensland town’s Burnett River overflowing to the extent houses washed off stumps.
Suncorp, Queensland’s biggest insurer, logged about 1500 flood claims there. Some were unexpected.
“It was a one in 500-year event, therefore the water was two or three metres higher than anyone thought it was going to be,” Suncorp chief executive Patrick Snowball told The Courier-Mail.
“There are a lot of people who thought their houses would never flood, and we didn’t either. The good thing is we’re fixing them again.”
Brisbane-based Suncorp is the only major insurer to divulge this anecdote among players including RACQ Insurance and IAG – companies which introduced compulsory flood cover years after Suncorp. It raises questions about the precision of the sector’s flood mapping, with 2011’s inundation also hitting some unanticipated areas.
“It reflects entirely the effectiveness of the Almighty,” he said, adding insurers did not price on 1-500 year risks, with 1-200 being a standard worldwide.
The issue of pricing for floods comes amid concerns about overall premium affordability.
Profit results this week from IAG, owner of NRMA and CGU, show it reaped a 17.5 per cent rise in home premiums and “rate increases represent most of this growth”.
Suncorp’s more detailed accounts showed average home premium rises of 16 per cent – and some people have seen far larger jumps.
Premium rises affect the likes of Woodridge local Ted Bull, who complained his bill for a non-flood area had gone from $799.15 to $1070.50. That’s a 34 per cent rise, although the value of property protected also rose.
“When you’re on the pension, that’s quite a jump,” he said.
