Insurance bill for four natural disasters tops $2.7bn

Insurance bill for four natural disasters tops $2.7bn

18 February 2011

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Australia — According to the Insurance Council of Australia, 410 damage claims, estimated at $34.5m, have been assessed so far for properties in the Perth hills. The fires earlier this month destroyed 71 homes, businesses and other structures and damaged another 39.

As well as suffering fire damage, many homes were rendered virtually unliveable after smoke and ash spread through the interiors.

Insurance claims for the Queensland floods have reached $1.99bn, while claims for Cyclone Yasi stand at $517.5m, and for the Victorian floods at $175m.

ICA general manager Paul Giles said insurance firms were dealing with an unprecedented number of natural disasters, although “the industry response is well within its resource capability”.

There have been calls for insurance companies to adopt a single definition of flood after many people were told they were covered for flash floods but not floods caused by water flowing from rivers, lakes or dams.

In Perth, some people who lost their homes in the fires said their insurance companies had responded promptly.

Marlene Cross, from Clifton Hills, said the full insurance amount was deposited in her account the day after assessors visited the remains of her house.

“We’re so lucky because there are other people who’ve had lots of issues,” she said.

Some victims had been frustrated because their insurance company had asked them to list and value every content in their burned home.

Others, like pensioner Eileen Parker, found they were under-insured. Ms Parker, 72, insured her home for $118,000 and said she would be unable to rebuild.

She was also worried she would not be able to obtain disaster relief. Under the National Disaster Relief and Recovery Arrangements, uninsured people can receive $10,500 to replace essential household contents and $10,000 towards repairing or replacing their home.

But underinsured people would be considered only if they cannot return the house “to a habitable, safe and secure condition” and replace essential contents.

Ms Parker said the extra $20,000 would make a huge difference. Her daughter, Linda Lee, said her mother had paid insurance all her life. “So why is she being penalised?”

Suncorp commercial insurance executive Anthony Day said many small businesses were underinsured, with only 40 per cent having business interruption cover.

Assistant Treasurer Bill Shorten is due to meet insurance chiefs today to discuss problems arising from the floods, but the head of Suncorp, one of Australia’s largest insurers, has warned against government interference.

Suncorp chief Patrick Snowball said the best help the government could give the industry was to set firm parameters so companies could properly price insurance.

He said the insurance companies would pay out more for reconstruction than the government.

“On current estimates, over $2.5 billion will be paid in claims for those three major events, much more than the federal government will raise from its flood levy.”

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