“At this stage it is too early to confirm; however, based on the inspections performed to date, I would not be surprised if total costs exceed $50 million.”
That was the assertion made by Mark Thompson (pictured), head of major and complex loss for Asia-Pacific at Sedgwick, about the recent catastrophic bushfires in Perth Hills. Thompson, who also leads the claims management giant’s forensic advisory services globally, said the majority of properties Sedgwick has inspected so far were total losses to residences, farm sheds, fencing, and livestock.
He told Insurance Business: “Most rural properties have several buildings or structures on them, and it’s not just a case of the home and its contents. In addition to coverage for dwellings and sheds, certain of the farm policies have significant sums insured on fencing alone.”
On February 05, the Insurance Council of Australia declared the bushfires a catastrophe – meaning insurers and loss adjusters alike will have to prioritise the claims arising from the event, which began on the first of the month.
Read more: ICA declares catastrophe for Perth bushfire
From a response perspective, Thompson conceded that, as is typical with bushfires, gaining access to sites to perform inspections is always an issue. Additionally, he said the coronavirus pandemic has hindered them from bringing in additional resources from other states, as Sedgwick would normally do in a catastrophe of this magnitude.
As a workaround, the company has used remote or digital assessments where appropriate to do so, as well as transferring some business-as-usual cases to adjusters in other states to free up local capacity.
As for the other challenges, Thompson noted: “The length of the fire front (over 100km) and intensity of the fire required DFES (Department of Fire and Emergency Services) to only allow access to emergency personnel. Not even homeowners who had evacuated were allowed to return home for a few days.
“Temporary accommodation is also likely to be an issue, with rental properties in high demand in Western Australia and lack of ‘stock’. Rentals in rural areas are unlikely to be available.”
Thompson added that they have already seen building costs escalate due to lack of trades in the state’s building industry. “This will impact property owners from both a cost perspective and access to trades,” he warned, pointing to resources-related woes not only when it comes to builders but also with other relevant sectors.
Meanwhile, given the traumatic impact on property owners, he stressed the importance of adjusters applying care and sensitivity to their approach.
“Bushfires are part of life, so to speak, in Australia, so Sedgwick Australia has good management or response strategies which are in place to deal with them,” said Thompson. “Unfortunately, in this instance it has been reported that a number of fires were intentionally started, which, sadly, seems to occur too regularly.”