Reinsurance News

ICA increases Townsville flood loss estimate to AU $1.24 billion

2nd August 2019 - Author: Matt Sheehan

The Insurance Council of Australia (ICA) has increased its estimates for insured losses resulting from the Townsville floods in February, putting the latest figure at AU $1.243 billion (US $844.2 million).


Photograph: Andrew Rankin/EPA

This represents a 19.5% increase from the AU $1.04 billion estimate released by the ICA in March, a number that was later corroborated by catastrophe loss data aggregator PERILS in May.

Karl Sullivan, Head of Risk and Operations at the ICA, said that insurers had received 29,935 claims since the catastrophe was declared on February 2.

Around 60% of these claims have now been closed, with more than AU $521 million (US $354 million) already paid in repairs, rebuilding works, replacement items, services, business interruption, emergency accommodation and settlements.

This includes more than three-quarters of the 4,529 domestic motor vehicle claims, more than 60% of the 9,213 contents claims, almost half of the 12,850 home building claims, and around 45% of critical home building claims.

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The city of Townsville and the surrounding area in northeastern Queensland experienced torrential rain and flash flooding throughout much of February 2019, and was immediately declared as a catastrophe by the ICA.

The flooding was compounded further after flood gates at the Ross River dam were fully opened to drain dangerously high water levels, releasing up to 1,900 cubic metres of water a second and sweeping away cars and more than 300,000 livestock.

Analysis has shown that North Queensland’s federal seat of Herbert (which includes Townsville) as Australia’s most flood-prone electorate.

“Since the catastrophe struck the region, the insurance industry has kept its focus on assisting Townsville’s recovery,” said Sullivan. “It is ahead of its past response times for a natural disaster of this size despite the remoteness of the city.

“This is a challenging time, and insurers have pledged to handle these cases swiftly and in good faith,” he continued.

“Many of these cases are being dealt with through each company’s internal dispute resolution process, and a small number of claims have progressed to the Australian Financial Complaints Authority.”

Sullivan also acknowledged that about 1.5% of claims received from the Townsville catastrophe had been denied by insurers because the policy bought by the customer did not cover the losses. In many instances, the ICA said, this was due to a decision by the policyholder to not take out flood cover.

While efforts will continue to close the remaining insurance claims, the ICA cautioned that a number of factors are likely to contribute to the time it takes to reach closure.

These include the remoteness of the region, policyholders being slow to sign off on repair work, the need for expert hydrology in some cases, disputes over hydrology report findings, disputes over claims for damage to poorly maintained properties, and involvement by claims advisors, unqualified stakeholders, and unlicensed builders.

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