Reinsurance News

MP’s call for Australia’s cyclone reinsurance scheme to cover fires and floods

10th March 2022 - Author: Katie Baker

The Guardian Australia has reported that state and federal MPs representing flood-affected communities in Australia have called for the planned commonwealth cyclone reinsurance scheme to be expanded to cover other natural disasters.

australia-townsville-floodsAccording to the Insurance Council of Australia, the estimated current cost of claims is now just over $1 billion, which will be heavily assessed as loss adjustors move in over the coming weeks and will increase as further claims are made.

The MP’s claim that a vast amount of people impacted by Australia’s current east coast flooding couldn’t afford insurance cover even before the current crisis struck, says the Guardian.

Insurance experts told a federal Senate committee on Tuesday there was a “market failure”, while the industry’s peak body said governments should spend more on disaster resilience.

Liberal MP Warren Entsch reportedly said last week the federal government should expand its reinsurance pool for northern Australia to other parts of the country.

Stratumn, by SIA Partners

The current model, backed by a AUD$10 billion government guarantee, aims to protect more than 500,000 properties in the path of cyclones and cyclone-related flooding in the country’s north.

Janelle Saffin, the Labor MP for the state seat of Lismore in New South Wales, said expanding the reinsurance pool would be late, however it would be better than never.

She also explained that many people in her electorate were unable to afford insurance and she would support any proposal that would reduce premiums.

Saffin commented: “The Insurance Council is here, we’re meeting the CEO here today. I’ve read all that (about expanding the scheme), those are the conversations we’re having,”

“There’s an idea of rebuilding better. Disaster rebuild assistance says you rebuild to the same standards. But we’re not going to do that, we’ve got to rebuild better.”

Saffin has called for a joint state-federal flood reconstruction commission to bring together government agencies, along with calling for the commonwealth to provide grants for private buildings like doctor’s surgeries which had been devastated by the disaster, as well as a jobkeeper-style program to cover the wages of workers in flood-affected businesses.

According to the Guardian, as of Tuesday the federal government said it had already paid $282m in flood disaster payments to 242,000 people.

The federal Coalition MP Kevin Hogan’s electorate of Page overlaps the state seat of Lismore. He too backed the expansion of the reinsurance pool, telling Guardian Australia he was “very supportive of that”.

Federal Labor MP Justine Elliot, whose seat of Richmond covers devastated Mullumbimby, said “we need to be having those conversations moving forward”.

“This is their home, people want to stay here, but lots of people don’t have insurance because they can’t afford it,” she said. “What we need is housing, short and long-term, particularly for thousands of people who have been living in caravans.”

Greens state MP for Ballina, Tamara Smith, said insurance premiums for her constituents could easily top $1,000 per month, a number that many wouldn’t be able to afford.

Smith commented: “Reinsurance is so necessary. Most businesses and most homeowners here just aren’t insured.”

She said it was too early to make long-term rebuilding decisions, but suggested governments could offer to buy back people’s homes or incentivise them to rebuild in areas out of immediate flood danger.

Smith added: “That’d be really sensible. There will be people who want to rebuild, people who want to leave.

“It’s cruel to have the conversation now but we have to think about what adaptation to climate change looks like.”

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