ICA defends “prohibitively expensive” premiums

ICA defends “prohibitively expensive” premiums | Insurance Business Australia

ICA defends “prohibitively expensive” premiums
Australia’s peak insurance body has defended what has been tagged as “prohibitively expensive” insurance premiums of up to up to $30,000 a year in flood-impacted northern New South Wales.

The Insurance Council of Australia (ICA) said that for premiums in the region to come down, there is a need for the Federal Government to allocate $200 million in the upcoming budget for flood mitigation measures.

Residents in Lismore in northern NSW said, however, that flood insurance remains prohibitively expensive despite a town levy designed to lower the risk of catastrophic damage, ABC reported.

“Insurers are required to risk-rate customers, and where the risks of flood are high, those risks are reflected in the premiums,” ICA spokesman Campbell Fuller told ABC.

“The only thing that can significantly and sustainably reduce the risk of flood is permanent mitigation.

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“And the flow-on effect from that is that premiums fall - we’ve seen that right around Australia where permanent mitigation is put in place.”

The ICA spokesman said Lismore’s levee did not reduce the risk of damage for larger floods, and therefore could not curtail the high insurance premiums.

“The flood levy in Lismore is designed for a very small flood, it’s not designed for the catastrophic flood that we have seen in Lismore and that Lismore has suffered in the past,” he told ABC.

Fuller also denied claims that commercial flood insurance was not made available to businesses in Lismore.

“Commercial flood insurance was available from most insurers, but that flood insurance is related to the risk of a catastrophic flood,” he said.

“Now we’ve seen that catastrophic flood happened because the mitigation in place was insufficient to deal with the floodwaters that hit the town.”

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