Brokers brace for flood fall-out as catastrophe worsens

Brokers in Queensland and NSW are fielding calls about cover terms, trying to beat the claim-lodgment rush and even rolling up their sleeves to help move furniture after catastrophic floods struck the region this week.

The city of Brisbane and surrounding towns suffered major flooding as a catastrophic east coast low descended, and Lismore in NSW experienced its worst flood in its history.

The Wivenhoe Dam peaked at 184% capacity, thirteen people are known to have died, and insured losses may reach $2 billion, S&P Global Ratings estimates, while the Insurance Council of Australia (ICA) says claim numbers have soared past 48,000.

Brisbane-based Hunter Broking Group MD Josh Ryan says he lives on one of the very few streets in his suburb that avoided inundation.

“I was waist deep moving people out of their houses. They are so heavily affected, you just want to do what you can to help. There were 20 or 30 people there, walking through water trying to get people’s stuff moved out,” he tells insuranceNEWS.com.au.

“It is a bit of a whirlwind at the moment because when you are a local broker to multiple suburbs that are highly flood rated, and you insure a lot of locals, it is a snowball effect. We are just going through the process now and trying to manage it all effectively.”

Hunter Broking clients, of which around 70% are in Brisbane and the rest mostly in the Sunshine Coast and Gold Coast, have been affected, with some clients calling as the water entered their properties.

“We are getting more claims in every hour. There will be more to come, it is just trying to understand how many more,” Mr Ryan said.

“It is just a waiting game now to see what sort of impact it has on premiums, what sort of delays we have with the insurance and how many clients were affected that we haven’t heard from.

“It has been an eye-opener this time. It quite easily happened with a heavy downpour and being another declared catastrophe event, I am concerned about what it is going to do to the premiums for flood affected areas because they are already unaffordable.”

Most claims so far fall under landlord or home insurance, he says, but businesses have flooded as well, and large clients with civil contractors have lost machinery at job sites across southeast Queensland, one losing three machines worth $500,000.

“We have had quite a number of claims. Someone only flooded a little bit but others had their whole house or one storey go under,” Mr Ryan said. “We have good support from a lot of the insurance companies and our licence holder PSC and really good processes and procedures in place. Rather than each broker looking after their client, we are all trying to work together.”

Following the 2011 Brisbane floods, insurance policies now have a standard flood definition, but price can be a problem. Mr Ryan says after flood mapping was changed around a year ago, insurers increased flood premiums significantly.

“We receive one or two quote requests a day from businesses and individuals that have had their premium increased, and it is not uncommon for us to have a client with a flood affected home where premiums range between $10,000 and $30,000 for home insurance.”

“So it is a bit concerning if premiums will rise even further – or even some flood affected areas that have been hit twice might be uninsurable for flood now.”

Flood cover on business insurance is mostly on an opt-in basis, and insurers like Allianz allow home and contents policyholders to opt out of flood cover. Mr Ryan says there have been clients that did choose to opt out of flood because the premiums were too expensive, though only “5% or less”.

“Most clients keep that cover in and just fund it monthly because in most cases, a lot of the clients that are needing flood insurance – particularly if it is really expensive – have flooded before and do not want to go through that again.”

Claims Manager for CorpSure Darna Biegmann told insuranceNEWS.com.au that Brisbane office carparks and lift wells were flooded.

“In the first two business days after the worst of weekend rain, we received nearly three weeks’ worth of claims notifications,” she said.

“The majority of the claims have been for water leaks, flooded homes, businesses and cars. With parts of the Brisbane CBD still under water, we are still yet to determine the full extent of this damage to our clients. With these properties we are aiming to have claims lodged, trades and assessors ready for when this water recedes.

“Our biggest concerns moving forward are lines of communication with insurers and trades with such a high volume of new priority claims coming in and already increased demand of trades and materials due to covid.”  

Gallagher Head of Claims Adam Squire says his team are taking action to support clients, getting claims lodged, arranging make-safes or clean-ups and instructing adjusters.

“This is a very significant event, the largest I’ve seen for quite a while,” he tells insuranceNEWS.com.au.

“This feels similar if not bigger to the 2011 Brisbane floods. The numbers that I’m already seeing suggest that as well.”

Underscoring the complexity the floods present, Gallagher says its large commercial corporate clients have been impacted at multiple locations – one reporting 50 affected sites. Brokers are concerned rebuilding will be slow and expensive, particularly as existing supply chain problems are likely to mean delays for building materials.

“This is a difficult event in terms of what the industry was already facing,” Mr Squire said. “It’s going to present some interesting challenges.”

He says claims personnel shortages are also being experienced across the insurance industry.

“Often you’d have had people coming into the country on visas to supplement claims teams. We haven’t had that for two years,” Mr Squire said.

Catastrophic events generally begin with a lot of claims being lodged and “a lot of good will,” he says. Then in three or four weeks, as claims start to be managed and people want repairs and clean-ups done, Mr Squire says “you can lose a bit of good will because there can often be delays”.

“That is when a good broker is really important because we can navigate the insurer for a client and get to the decision maker in a way that direct customers can’t do,” he said.

At Oxley Insurance Brokers’ Port Macquarie office, brokers’ assistant Andrew Webb tells insuranceNEWS.com.au the team and their clients are in “watch and act” mode. While so far the area has avoided the flood catastrophe, Bureau of Meteorology advice suggests risk from the extreme east coast low event remains over the coming week.

Oxley, which also has offices in Coffs Harbour, Forster, Kempsey and Taree, has seen flood cover rise to more than $10,000 for clients, and Mr Webb says in recent days some clients have called to be sure they understand their policies correctly and have flood cover in place.

The Hunter Broking team has waited patiently for the water to subside so assessors can be appointed and get out to review and start the restoration process, and Mr Ryan says social media and the memory of 2011 has spurred Queenslanders into action.

“It was only 11 years since we had our last flood. This time around there was more community support. There were countless amounts of people reaching out saying ‘I’ve got food, a room, if you need a hand moving your furniture or transport somewhere’.

“This time around, particularly after what we have been through with covid, everyone has said let’s just get the job done and help each other out. That has been really nice to see.”