The water was still receding across the huge expanse of country hit by Cyclone Alfred, sodden homes and belongings were yet to dry out, and immovable cars still sat abandoned on muddy roads, when the insurance claims (pardon the pun) began pouring in.
Early last week the Insurance Council of Australia (ICA) reported around 3000 claims from property owners. That early figure more than trebled within a day, and after another day the figure had risen to over 22,000. A day later still the Insurance Business Magazine was reporting a figure of over 34,000 and rising rapidly. No-one has a clue where it will finish up.
At that early response stage last week, insurers had distributed nearly $2.4 million to about 6000 policyholders (about $400 per claim) in emergency payments for food and temporary housing. But that’s nothing compared to the colossal payout that will inevitably roll out over coming months and years.
What can be said about this disaster that hasn’t already been said? The Climate Council’s scientific people put out a lengthy media statement last week pointing out that while science was still working with the detail, it was clear that Cyclone Alfred was not simply “natural”, but was made more destructive and dangerous by carbon pollution from fossil fuels.
With many Queensland and NSW communities hit this time still recovering from catastrophic floods in 2022, the Climate Council cited evidence from weather records showing more frequent heavy rain events, proving exhausting, traumatising and costly for communities repeatedly affected.
Brisbane has had four major floods since 2011. Over the past five years over half of all Queenslanders have either been forced to relocate due to disaster or know someone else who has. And since the 1970s the cost of extreme weather disasters in Australia has more than doubled, with floods, cyclones and storms making up 70 per cent of that cost.
In the months ahead, affected people and communities will face the costs of recovery and rebuilding. With many days of rain over a large densely-populated coastal area, this will be a massive hit costing billions of dollars. To try to facilitate assessments, the ICA has declared an “insurance catastrophe” – the sixth such declaration in the past five years in Queensland, Australia’s Disaster Central with Brisbane at its epicentre.
“We already have a huge crisis when it comes to providing insurance for homes that are in a flood area,” ICA CEO Andrew Hall told ABC Radio National last week, pointing out that the same areas are being hit repeatedly by storms and floods. He’s calling for state and federal governments to spend more insurance tax money on flood levies, to “normalise” policies in the most affected areas. But what does that mean? How can anything be made normal in times of rapid change?
One thing we do know: unless we decide to risk losing everything you and I will keep paying more for insurance. Those in the major disaster zones will pay most, but everyone has to share some of the burden. And it’s a global burden. We all have to help pay for disasters everywhere on the planet, as every other policyholder has to help pay for ours.
Along with all other insurance industry CEOs, Andrew Hall doesn’t need convincing that we’re drifting into a climate catastrophe. Standing apart from the rest of the commercial world, everyone in this industry knows about the rising impact of weather events because it’s up in lights for them all the time, measured in the increasing amounts of money they’re having to fork out to customers.
It should also be up in lights for us customers. The cost of home and contents insurance has everywhere been rising at a markedly greater rate than the consumer price index (CPI), especially over the past 20 years. In Brisbane, according to an Australia Institute report last November, from 1989 to 2024 the cost of home and contents insurance rose well over five times CPI. In Hobart home insurance rose 3.5 times CPI.
Where is all this taking us? For Australians on low or fixed incomes under-insurance is now the preferred option. In disaster-prone parts of Australia many home-owners have abandoned any kind of insurance. For them it has become the stuff of dreams, along with disposable income. We’re in a whole new place.
ON SATURDAY, Sustainable Living Tasmania is convening the Big Day of Circular Living Ideas from 10 am in the C3 convention centre, South Hobart, with special guest Craig Reucassel of the ABC’s War on Waste; also Gardening Australia’s Costa Georgiadis. Details: slt.org.au