Record flooding continues to impact large areas of NSW, including the mid north coast and Sydney. According to the Insurance Council of Australia (ICA), insurers have received more than 3,500 claims. The scale of the event suggests many more claims could be lodged in the coming days.
Floods are now Australia’s most costly natural disaster – ahead of hail, bushfire or cyclones – and an ongoing challenge for insurers and brokers. However, industry stakeholders say flood resilience efforts are lagging behind initiatives to reduce other nat cat risks.
During an interview with Insurance Business, Andrew Stafford (pictured) said one major obstacle to better resilience and mitigation efforts is a lack of available data. He agreed with calls by the Insurance Council of Australia (ICA) for a national flood database.
“Everyone's working off a different base [of data] and because we don't have a consistent approach, it makes assessing the risk difficult in the first place,” said Stafford, who is operations manager for FM Australia, the global specialist property insurer.
Meanwhile, other problems are increasing the flood risk challenge for insurers.
Climate change and the increasing frequency and intensity of floods, he said, compels insurers to focus closely on what flood exposures many years into the future will look like. At the same time, Stafford said urbanisation is increasing flood impacts by putting more properties in risk zones and creating hard surfaces that increase water impacts like runoff.
Stafford said floods are managed at a state and local council level which complicates the bid for a national flood database. He said the ICA is trying to pull this information together.
“But as you can imagine, it's costly and it's very time consuming to try and get around to all the councils and establish what the latest status of the flood maps are,” said Stafford. “It's really up to the local councils as to when they would update the flood studies and they'd have to conduct a hydrological survey to do that,” he said.
“Then, as a country, I don't think we've invested enough in resilience,” he said. “The lack of investment, I think, at the government level and the infrastructure - that's what the ICA was calling for in establishing this Future Fund,” said Stafford.
The ICA frequently calls on governments to invest more in flood resilience, including the levees and stronger building codes that can protect communities in vulnerable areas.
In February, the ICA called for a Flood Defence Fund (FDF). The $30.15 billion government investment over 10 years would aim to protect the country’s most at-risk catchments in Queensland, New South Wales and Victoria.
The plan, intended for implementation over 10 years, is designed to enhance flood resilience, reduce disaster recovery expenses and lower insurance costs.
Flood risks have grown in recent years.
According to figures released by the ICA, about 1.36 million properties face “some risk of flooding.” Estimates also suggest that half of these properties fall short of the flood resilience measures of modern planning and building standards.
Anther big problem is that flood risks tend to impact people who already face economic challenges.
Based on data from the 2024 National Flood Information Database (NFID), the ICA said about 70% of households exposed to the highest flood risk are in areas where the average income is below the national median of $92,000.
About one third of those households have incomes below the poverty line of $58,000.
“We know that the people who are living in these flood zones, less than one in four of them have insurance,” said ICA CEO Andrew Hall in an interview on ABC Radio. “Australia really has left a whole cohort of people behind, living in dangerous flood areas.”
The 2022 floods that devastated Queensland and northern NSW resulted in more than 240,000 claims. The cost to insurers was $6.3 billion – their biggest claims bill on record.
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