Australian Insurers Point at Mapping for Lack of Flood Cover

Despite the accusation that insurers are being less than sympathetic regarding flood claims in Queensland, Australia, the industry argues the lack of flood mapping has been the main culprit behind availability of flood insurance in the region.

“If more widespread mapping and data were available for Queensland, more insurers would be able to price the risk, leading to more flood products being offered to the [Queensland] community,” Rob Whelan, CEO of the Insurance Council of Australia (ICA) said in a statement released Wednesday.

Flooding in the Queensland and North West Victoria sections of Australia will likely dog reinsurers and carriers well into 2011. The area has been experiencing the worst flooding in 35 years as a result of the torrential rains that began in December of 2010.

According to the ICA, the insurance industry has been working with local governments to develop the National Flood Information Database (NFID), a key step in allowing insurers to properly price flood policies. The database currently includes 4.2 million properties located in flood zones that can be offered cover.

However, over 90 percent of catchments flood mapping data is still being sourced in the Queensland region alone, and the ICa argues that “some local governments and floodplain management authorities, responsible for this information have yet to release adequate flood mapping for their jurisdictions.”

“Insurers have demonstrated that where the risk can be properly understood, they will develop the product There is far greater flood coverage in states like [New South Wales], [Western Australia] and [South Australia] because flood mapping and data has been made available to the industry,” Mr Whelan said.

Despite the mapping argument, Queensland authorities are moving ahead with a “commission of inquiry” that will review the planning of governments and the response of private insurers, according to published reports. And interim report is due in August, with a final report needed by next year.

Insurers continue to be beset with claims as a result of the flooding. The Australia insurance industry has received approximately 12,000 claims with an estimated
insurable value of over $410 million, according to the ICA.

But not all claims will be honored, especially those that lack proof of flood insurance, said Heinrich Eder, managing director of Munich Re Australia.

“We have a large scale disaster and those who have bought insurance for flood, they will be compensated by those insurers, and those who haven’t can’t expect, compensation for a cover which they have not bought,” Eder told Australia’s ABC News in an interview. “If you have a house and you have no fire insurance and unfortunately you have a fire then no-one would suggest your house should be paid [for] by the insurance companies.”

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