La Niña 3.0 is coming, be prepared, be very prepared…

2021/22 was a year of weather to forget

In its Insurance Catastrophe Resilience Report 2021-22, the Insurance Council of Australia (ICA) declared four catastrophes in 2021/22 – the Mansfield (Vic) earthquake, severe storms (SA, Vic, Tas), and two instances of flooding in south-east Queensland and NSW.

This resulted in:

•      $6.41bn incurred claims

•      380,760 claims lodged

•      $17k average claim value.

To put this in context, there was a staggering $3.9 billion difference in the cost of insured damage between last year and the same period in 2020-21.

A system under pressure

Thousands of policyholders have joined the long claims queue that’s been created.

Assessing and processing this huge workload has been hampered by several compounding factors.

•      Pandemic lockdowns – stalled work on repairs and rebuilding while people were confined to their own homes or LGAs.

•      Shortage of tradespeople – tradespeople are inundated with demand for their services and there is more work than they can handle.

•      Lack of raw materials – supply chain issues have led to shortages in materials and soaring costs.

•      Demand for experts – insurers require engineering and hydrology specialists to produce impact reports before they can assess claims.

Insurers have already had to employ thousands of additional staff to cope with the vast number of claims. Standard processing times have been put under strain as insurers spend far more time corresponding with customers than they usually would, to keep them informed about what’s happening.

The battle is slowly being won, and it’s an ongoing, mammoth effort by everyone involved in the insurance and strata sectors.

Looking forward, it seems we’re in for more of the same. A third successive La Niña has now been declared for this summer season. Water tables and dam levels are already high. And we’ve all been put on notice.

The frequency and severity of extreme weather events in Australia aren’t showing any sign of easing. 11 catastrophes have been declared since 2019 with around $13bn paid out in claims by insurers.

Whether it’s devastating floods and storms, or terrifying bushfires, each new catastrophe that’s declared by the ICA further focuses attention on the need for greater efforts by governments, organisations and individuals to tackle climate change.

Getting through all these claims backed up in the system and handling new events through the approaching summer storm season will require patience and compassion all round. Finding faster or more pragmatic resolutions to assist policyholders will require the skills and expertise of insurance professionals.

Have an expert in your corner

BCB understands that a broker’s role is far more than providing quotes and setting up policies.

•      We work alongside strata managers to identify areas of risk and recommend which risks to insure against.

•      Our intricate knowledge of policy terms and conditions, benefits and exclusions, enables us to find the most appropriate cover for a customer’s individual needs.

•      We offer a full claims management service, presenting a claim to the insurer in the most favourable way to facilitate a prompt and uncomplicated settlement.

A powerful advocate

As a broker, we are a single point of contact, managing all the communication and negotiation with an insurer, and any third-party providers or specialists, such as loss adjusters.

So, when it comes to making a claim, we occupy a unique position between the customer and the insurer. A broker has exclusive insight into the event giving rise to the claim, as well as the specific details of the policy, which allows us to identify any potential issues that may impact settlement early in the process, potentially avoiding lengthy delays and unnecessary anxiety in what is likely already a difficult situation.

If a claim hits a roadblock, a broker can step in to negotiate with the insurer on the customer’s behalf. The power of a mutually beneficial ongoing relationship with an insurer comes to the fore here, providing brokers with greater leverage to overcome objections and often achieve a positive outcome where a claim may otherwise have been rejected.

Tips to be prepared for another wet summer

Before La Niña 3.0 arrives, there are some simple things you can do to ensure a property is prepared for the season ahead.

1.  Review insurance policies and check they cover what you need with an appropriate sum insured – storms, flood, temporary accommodation etc.

2.    Undertake any necessary property maintenance – remove dead or rotting trees and trim overhanging branches, clean gutters, repair damaged or loose roof tiles, and seal any gaps in windows and doors.

3.    Prepare an inventory of home contents so you have a record of items and their value.

4.    Have a storm readiness kit – torch, radio, candles, matches, new batteries and important documents or contact numbers.

No one can stop the rain, but together we can all do our best to be as ready as possible for it.