The aftermath of the NSW and Queensland floods: Are insurance premiums set to rise?

The aftermath of the NSW and Queensland floods: Are insurance premiums set to rise?

Photograph: Natalie Grono/The Guardian

Australia’s east coast was recently hit hard by severe weather. Over the past few weeks, many residents have been returning home to assess the damage to their flood-affected properties.

According to Insurance News, insured losses from this event are estimated to be sitting at $3.99 billion. This makes it Australia’s largest flood loss on record.

Residents from Brisbane, Lismore, Sydney and Penrith have been left to navigate the devastating aftermath. Already more than 96,000 claims have been made, 80 per cent of which were for homes.

As insurers handle the influx of claims, they are moving customers in the most severe situations to the front of the line. This has been done to make sure they can get back on their feet as quickly as possible.

For less severe claims though, people may need to wait a couple of weeks to begin the assessment process.

So far, 69 per cent of the flood-related claims have come from Queensland, while 31 per cent have been from NSW.

What will be the future impact?

Catastrophes are becoming increasingly commonplace. As their frequency goes up, we could see insurance premiums follow suit. 

Though currently, it’s too early to say what the exact impact on premiums will be.

Insurance companies have reinsurance, which is a cover they purchase to protect against insolvency. When these types of events happen, the cost of reinsurance can be impacted. This can subsequently drive up the cost of insurance.

It is also possible that people who don’t live in flood-affected areas could see their premiums rise. So regardless of where someone lives, it’s important to compare a range of home and contents insurance policies to find the best deal.

Think of when you are doing some building work for example. In these instances, people are always encouraged to get at least three quotes to compare. Insurance quotes can also vary a lot between providers and looking at a few options can help you determine which will be the right fit for you.

It’s also worth checking whether flood damage is included in your policy, because it is often optional cover that is provided for an additional fee.

Next steps if your home has been impacted

If your home has been impacted by storms and flooding, it’s recommended that you take photos and videos of the damage before starting any clean-up efforts. This can be used as evidence when you are making your claim.

It is also advised that you hold onto samples of materials and fabrics. These can be shown to your insurance assessor. Any water-damaged goods that could pose a health risk, including carpets and furniture, can be removed though.

Depending on the extent of the damage, there may be a few items that could be repaired or salvaged. These should not be thrown away.

When inspecting your property, it’s a good idea to keep a list of all items that have been damaged, with detailed descriptions and serial numbers if possible. 

Make sure to speak with your insurer before authorising building works, such as emergency repairs. Not all insurance policies will necessarily cover unauthorised work.

Get in touch with your insurance adviser for more information. We can work with you to make sure you get the appropriate level of protection.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.