Flood Damage

Flood Damage Extends To $438 Million With Clean Up Well Underway

The insurance costs from the Queensland and New South Wales flooding have extended to an estimated $438 million, as the focus shifts to the clean up and future impact of this natural disaster. Tens of thousands of people have already made claims to insurance companies customer support teams.

According to the Insurance Council of Australia, an estimated 29,213 claims had been made, in regards to the floods, as of the end of March. More damage locations are being assessed as the conditions continue to ease and people return to their homes.

With the Bureau of Meteorology stating that no further flooding is projected, assessors have been visiting affected regions as soon as it is safe to do so. Although there has been cause for concern, in regards to flood insurance transparency in the terms and conditions and whether it has in fact been selected by those who are affected by the flooding. Including the sum insured for and the ability to cover the cost of damage and any business interruption.

The Federal Emergency Management Minister, David Littleproud has asked insurers to “show a little bit of humanity and have a social conscience to [the people affected by the floods]” when appearing on Sky News Sunday Agenda last week. 

Also making a point to mention that “people entered into these contracts in good faith, and we would expect insurance companies to act in good faith”. Littleproud also sees this as a great opportunity for the insurance industry to improve their reputation amongst consumers. 

Support teams have been deployed in flood affected areas and are assisting with the arrangement of emergency repairs as well as organising temporary accommodation for customers, according to Suncorp CEO Steve Johnson. Mr Johnson also commended the Federal Government’s swift response in urging state governments to insurance workers and tradespeople as essential workers. 

Giving insurance workers as well as tradespeople the confidence to cross borders with the intention to support flood affected communities. They have also committed to getting customers back on their feet as soon as possible. Therefore it is incredibly important that assessors and repairers have access to these areas. 

There has been additional support from NSW Land Registry Services who are making title searches, replacement Certificates of Title and plan images free for property owners affected by the flooding. These documents not only provide peace of mind to owners but also help landholders with insurance claims and development applications to council.

Disasters such as flooding are a good reminder to check your insurance cover in order to protect your business or home against adverse events. Craig at Business Insurance Consulting may be able to assist in finding the optimum cover when it comes to business or home and contents insurance cover.

Credit:

Insurance News Website

Insurance Business Magazine
Image – NSW SES through 7 NEWS

Insurance

Positive Opportunity For Insurers To Embrace Change

EY Global released their 2021 Global Insurance Outlook report where they suggested there is an opportunity for general insurers to change their business models as we approach a post-COVID world. 

The pandemic encouraged numerous changes that were slowly being implemented prior to the outbreak we experienced last year. We saw a substantial investment in digital methods including IT innovation, to stay in touch with consumers. There is a clear preference to communicate through mobile devices such as phones, tablets and laptops. 

“The global insurance industry is facing a truly unique moment in its long history,” the report stated.

The disruption faced over the past year has provided a positive opportunity for insurers to embrace digital transformation. The industry has the potential to improve itself to align with modern times and market needs.

Although it is the responsibility of individual insurance companies to reposition or even reinvent themselves, EY believes the insurance industry has notable advantages and the ability to achieve growth and opportunity. 

EY Sector Leader Grant Peters wants Australian insurers to connect more with their customer base and explore digital opportunities available to them.

The digital trend is becoming increasingly popular amongst consumers and is likely to continue. Mr Peters mentioned that “some of these trends existed pre-COVID but have been accelerated.”

A trend that is already prevalent and will continue is more flexibility in product terms and offerings that insurers have for consumers. Tailoring products for different consumers need to improve the overall customer experience. It is projected that we will see more innovation and competition in the area of insurance. 

The EY report also mentions there will be a greater need for individual and commercial insurance solutions with the current economic recovery. 

With the introduction of stricter regulations and reporting requirements, insurers will need to review the way in which they manage performance and share their strategies with capital markets. 

Insurers have demonstrated their ability to adapt efficiently to a digitalised world. They now have a unique opportunity to embrace change and enhance their reputations in a customer-centric approach. 

Credit:

Insurance News – https://insurancenews.com.au/local/pandemic-gifts-industry-opportunity-to-remake-for-future

2021 Global Insurance Outlook Report – https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/insurance/insurance-pdfs/ey-2021-global-insurance-outlook.pdf

Construction industry insurance

How The Construction Industry Will Be Impacted By The Capacity Crunch?

The Australian construction sector is facing increasing pricing, higher excess levels and restricted insurance cover due to natural disasters and project failures. There is a looming potential for insurers to shift away from long term construction risks, instead replacing them with annually renewable risk exposures. 

At the beginning of the year treaty renewals experienced an increase in reinsurance costs. This lowered profitability and led to multiple insurers completely withdrawing their cover from the construction industry, decreasing the supply chain.

The construction market recap report from the past few years outlined “the construction industry is not immune to major events”.

This has created implications for long term contract periods, with capital reducing long term risk and alternatively opting for short term risk exposures. 

A sequence of high profile construction project failures globally, in combination with an array of natural disasters as well as COVID-19 has impacted the construction industry greatly. So much so that insurers are considering insurance coverage restrictions for the construction industry. 

A number of insurance companies have placed their construction books into run-off and in the last 12 months or so, 15 global leading markets withdrew from underwriting construction risks. This resulted in a $1.27 Billion loss in market capacity. 

These losses have led multiple insurers to review their long term participation in the construction industry. Insurance premiums increased by 30-35% last year, with construction liability insurance and excesses also rising significantly. 

The report suggests that insurers will become more selective with the terms and conditions that they offer for construction risk. Other areas of insurance including property and casualty are also on the increase, as major markets avoid risks that don’t adhere to strict underwriting guidelines. 

Head offices are adopting an underwriting approach that focuses on practicality and profitability. Many underwriters are waiting for lead terms to be finalised before considering their participation in the industry, as they are restricted to the original approved terms. 

An example of a key area for concern is water damage. Insurance companies have experienced high volumes of claims for residential and building projects relating to water damage. This has led to increased premiums and cover being limited or excluded completely.

Businesses within the construction industry weighing up their insurance cover options may achieve a more positive outcome by investing in an insurance broker. Demonstrating lower risk and associated capital spend will optimally position businesses to obtain the best cover available. 

Despite the challenging entrance into 2021, insurers have the ability to position themselves to improve outcomes and navigate the market optimally in order to limit cost increases. 

Craig from Business Insurance Consulting is a highly experienced insurance broker that can assist with finding optimal cover for businesses, within the construction industry, that have been impacted by the capacity crunch. Get in touch with Craig for more information in regards to adequate cover for your business.

Credit:

Insurance News – https://www.insurancenews.com.au/local/capacity-crunch-hits-construction-sector