ICA to push market-based flood cover solution

News >> News on Insurance

The Insurance Council of Australia (ICA) will propose a premium rebate scheme exclusively for properties at high risk of flood when it submits its response to the Natural Disaster Insurance Review (NDIR) later this week.

Under ICA’s plan, the rebate for the 135,000 homes at high or extreme risk of riverine flooding would be funded out of the $4.6 billion that is currently collected each year by state governments from their taxes on insurance policies.

“The money pool is actually already there – it’s just how you allocate it,” CEO Rob Whelan told a seminar in Sydney last week that examined the review panel’s options paper.

A key plank in the proposal is that additional funds from the $4.6 billion are also set aside for appropriate risk mitigation programs to be put in place to reduce the flood risk that these properties pose over time, with a view to the market being able to eventually provide cover for them at reasonable premiums.

“The industry sees this as perhaps the best way of eradicating the problem rather than just band-aiding it,” Mr Whelan told the joint ICA-Institute of Actuaries seminar.

He says mandatory flood cover, as is being proposed by the NDIR as one of three options, could drive up costs and reduce market competition while doing nothing to lessen the flood risk faced by many homes.

“It doesn’t deal, from our point of view, with the real problem,” he said. “It gives no incentive into the marketplace to mitigate the existing risk levels, and it also gives no incentive to stop the growth of at-risk properties.”

Along with the premium rebate proposal, Mr Whelan says a “dynamic market-based solution” would result in adequate flood cover being made available for all other Australian households.

He says component parts of the market-based solution are better flood maps and data, targeted flood mitigation and better land-use planning, which would enable more insurers to offer flood cover more widely.

“This leads to overall lower risk levels and increases the number of insurers coming into the marketplace, driving up competition, lowering risk levels, and therefore lowering the premiums in the marketplace, increasing the overall level of affordable flood cover as a consequence.”

Mr Whelan says that for the 93% of properties not at flood risk, flood cover is already becoming more widely available, with 54% of household policies currently offering some kind of riverine flood cover, up from 3% in 2006.

He says that with some 90% of catchment areas expected to be mapped into ICA’s National Flood Insurance Database by 2012, the availability of flood cover should rise to around 85% of all household policies by the end of 2012.

“Cover is available and will increasingly be available going forward,” he said.

 Terry McMullan

Last changed: Sep 23 2011 at 11:39 PM


  1. None Found

Add Comment

Latest News

Robert Cooper - one of 100 faces of small business

This week it was announced as part of Small Business Week,  that Robert has been named one of the 100 faces of small business for a State Government promotion on the great value that small businesses play in the State of Queensland.

You can see Robert's entry here:

It is the third accolade for CPR Insurance Services in a month and after seven and a half years in business is a real pep up for the company.

For Robert, it is the culmination of many years experience, becoming well qualified, experiencing the highs and lows of a career and always wanting to contribute to his community. Sometimes, these things just come together and you receive recognition for your efforts.

Robert says that there is no doubt that starting your own business is a huge challenge, but with the right research and planning, the right people around you and a good set of values that you apply to the vision of the company, you have a very good chance of making it all succeed.

Robert says he is lucky. He has a strong supportive Wife, Mandy, who is also part of the business, along with efficient and hard working staff such as Julia McLauchlan and Aidan Harmer who are building up their own skills in a learning environment. 

However, the most important and most supportive people for CPR Insurance Services are our clients who have stuck by us and supported us over the past seven years. Our focus remains on providing the best possible service we can and always acting in their best interests. To all our clients, we say thank you!

read more

CPR Insurance wins Brokerage of the year

CPR Insurance Services picked up the award for the Best Brokerage (1-5 staff) in Australia, last Friday Night (4th May 2018) at the Insurance Business Magazine Awards held at the Westin in Sydney.

Judging came from various parts of the industry. It is a great honour to be recognised for our hard work and particular Business values we follow. A full list of winners is listed here.

Success comes from having great staff, and we thank Aidan Harmer and Julia McLauchlan as important support staff for helping us win such an award.

CPR Insurance has been in operation for more than 7 years now and is only successful because of the wonderful support from our staff, insurers and most importantly, our fantastic clients who put their faith and trust into our company to be their Risk Advisers and Brokers. 

Thank you to all.

read more