Some industry stakeholders see insurers’ response to ex-Tropical Cyclone Alfred as an example of how the industry has improved claims processes since the 2022 floods. Kylie Macfarlane (pictured above) said this nat cat “is a fantastic playbook for how the industry has started to shift its processes.”
Macfarlane is chief operating officer for climate, operations and strategy at the Insurance Council of Australia (ICA). The COO gave a keynote speech at this week’s Claims Leaders Summit in Sydney. One focus of her talk was insurer progress in response to the 2022 parliamentary flood inquiry which she called “a pivotal moment for the general insurance industry.”
“One thing is clear, the industry has heeded the lessons from 2022,” said Macfarlane. “We've listened, we've responded to stakeholder feedback and we continue to evolve, both operationally and in the delivery of customer support.”
Many stakeholders could be anticipating further impacts from the 2022 flood inquiry. This week, the chair of that investigation, Dr Daniel Mulino, was named by Prime Minister Albanese as the new financial services minister.
However, Macfarlane said ex-Tropical Cyclone Alfred in March showed how insurers have improved their systems and human resources, including claims process.
Much of that demonstrable improvement, Macfarlane suggested, was in the lead-up to the event.
“Insurers preemptively contacted more than one quarter of a million customers across South East Queensland and northern New South Wales with safety and preparedness tips and information on how to lodge a claim as quickly as possible,” she said.
Insurers also added, said Macfarlane, hundreds of additional claims consultants and reserved temporary accommodation.
“At the same time, the Insurance Council released a new expressions of interest process to encourage interstate trades people to assist in the recovery and response,” she said. “We'd never done that before.”
The ICA has also tweaked the way it conducts community consultations and also does them for undeclared events as well as declared nat cats.
The first example of this listening and learning following the 2022 floods, said Macfarlane, came before the parliamentary inquiry, which tabled its report in 2024. In February 2023 the ICA commissioned Deloitte to analyse insurer response to the 2022 floods.
The COO said this report set “the new benchmark for catastrophe preparedness.” The report was called: The new benchmark for catastrophe preparedness in Australia.
Macfarlane mentioned its seven key recommendations that focused on:
Macfarlane said the ICA responded by developing “a baseline for industry coordinated events response.” This included an industry charter, planning guide and more engagement with local government.
She said a Deloitte follow-up report found that “the industry has made significant progress” including substantial investment in resources and more investment in technology.
Deloitte, she said, recognised the ICA’s disaster charter and playbook “as the only guidance of their kind globally, providing a framework for consistent response and support for customers from the general insurance industry in the aftermath of extreme weather events.”
However, she said this insurer progress is uneven and there’s more to do.
The improvements include “increasing maturity around stress testing and simulation activity” and “managing consumer vulnerability at scale.”
In terms of claims decisions, Macfarlane cited “increasing maturity of quality assurance functions.” This included better use of data to accelerate claims and improve their management.
Then came the 2022 flood inquiry report, tabled with 86 recommendations in October 2024.
“These recommendations, along with the findings from the parliamentary inquiry on climate change and premiums and the parliamentary inquiry on financial abuse, have provided the industry with a set of recommendations that, along with the recommendations from the General Insurance Code of Practice Code Review Panel, sets the standard of what the community expects from this industry,” Macfarlane said.
Macfarlane said of the resulting 150 recommendations, more than 100 were agreed to “or agreed to in principle.”
“Twenty-eight require further investigation just due to the nature of the recommendation or the complexity,” she said. “10 require individual insurer insurers to determine the practicality based on their own business model.”
Three that related to pricing, said Macfarlane, were rejected.
“The industry believes that the code of practice is not the appropriate forum or mechanism to determine pricing, and that these recommendations in general could breach competition laws,” she said.
These commitments were brought together under the ICA’s Industry Action Plan, released in March.
Macfarlane said implementation “has already commenced” and includes developing an industry vulnerability framework, a best practice guide for the use of expert reports and protocols to prepare for and respond to natural disasters.
Other industry stakeholders have questioned the utility of some of these changes.
“We can't ignore that the evidence that too many customers in 2022 did not get the experience they were entitled to,” said Macfarlane. “So change is necessary, inevitable and will ultimately benefit the industry as we rebuild trust.”
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