ICA Catastrophe: Something to think about for Christmas 2024

The Insurance Council of Australia (ICA) escalated its response to severe storms impacting Queensland, New South Wales and Victoria since 23 December 2023, declaring an Insurance Catastrophe.

This decision reflects the escalating severity of the situation, the high volume of claims already received, and the anticipated impact of further extreme weather events forecast for the coming days.

The ICA’s Catastrophe declaration serves to escalate and prioritise the insurance industry’s response for affected policyholders.  

Under the ICA Catastrophe declaration 

• Claims from affected policyholders will be given priority by insurers.
• Claims will be triaged to direct urgent assistance to the worst-affected property owners.
• ICA representatives will be mobilised to work with local agencies and services and affected policyholders as soon as emergency services say it is safe to do so.
• Insurers will mobilise disaster response specialists to assist affected customers with claims and assessments as soon as emergency services say it is safe to do so.
• An industry taskforce has been established to identify and address issues arising from this catastrophe.
• The insurance industry has made this Catastrophe Declaration to activate services and support for affected homeowners and businesses and reassure them that their insurer is there to help.

As of 29 Dec 2023, insurers had received 18,174 claims related to the storms across Queensland, New South Wales and Victoria, with 10,716 claims in the Gold Coast region alone.

Insurance Claims 2023

Access to storm-damaged areas remains hampered by ongoing power outages. The Insurance Council urge homeowners and business owners whose property or vehicle has been impacted to contact their insurer as soon as possible to initiate the claims process, even if the full extent of the damage is unclear.

For those beginning cleanup efforts, they are not obligated to retain damaged property, including carpets and furnishings. Simply take photos, record any identifying information, and keep material samples for claims purposes.

Quote attributable to ICA COO Kylie Macfarlane:

Given the immense scale and destructive nature of these storms across eastern Australia, the Insurance Council and insurers are escalating our response to a Catastrophe level to better serve the immediate and future needs of our customers. 

Insurers expect claims volumes to grow in the coming days as more residents gain access to properties and power is restored to some areas, however, it is too early to understand the cost of the damage. 

We encourage residents to put their safety and the safety of their family first and contact their insurer if they need immediate financial assistance. 

Something to think about for Christmas 2024

The costliest natural catastrophe in 2023-24 was the Christmas storms that impacted the Gold Coast hinterland, New South Wales and Victoria, comprising AUD 1.33 billion in claims.

Andrew Hall, Chief Executive Officer, ICA, commented, “The ICA’s latest Insurance Catastrophe Resilience Report shows the impact of extreme weather on our communities over the past 12 months. Flood is Australia’s most costly natural peril, and it’s estimated that around 1.2 million properties face some level of flood risk.

“Around 230,000 of these have a 1 in 20 chance of a flooding each year, with a further 420,000 properties facing a 1 in 50 or 1 in 100 annual chance of flooding, odds that translate into higher premiums which can lead to a growing protection gap.”

“In the last few years Australian policymakers have started to think more seriously about this issue, and in many ways we are leading the world in our approach to extreme weather risk mitigation and insurers’ product offerings that respond to these risks. But we need to redouble our efforts if we are to manage the impact of worsening extreme weather amid a changing climate.

“De-risking is the only sustainable way to reduce the pressure on premiums and close the protection gap: improved planning so no more homes are built in harm’s way, stronger buildings that are better able to withstand extreme weather, greater investment in public infrastructure to protect communities, and an ongoing program of home buybacks where no other mitigation is possible.”

Individual customers were impacted by ex-TC Jasper which hit Far North Queensland in mid-December, where the average claim was AUD 36,000, three times the average claim for the Christmas storms.

The ICA in the report also elaborated on the need for policy solutions which include improved land use planning, stricter building codes, and ongoing investment in resilience measures such as flood levees and home strengthening to improve community and household resilience to extreme weather.