Unequal Levees and Rising Insurance: Senate Inquiry Unveils the Risks

2

"Levees come in varying standards," emphasized Rhys Whitley, Suncorp's scientific specialist, during Friday's session. "Each levee is designed with a specific flood height in mind. Installing levees generally provides significant community protection and can lead to decreased insurance premiums, but not all levees offer the same level of security."

Dr. Whitley was addressing a query from the Senate select committee, which wanted to understand why some communities haven't seen insurance premium reductions despite levee construction. "Levees can be engineered for different return periods, such as a one-in-20-year or a one-in-100-year flood event," he explained. "If a levee is built to lower standards, it can be overtopped by sufficiently extreme weather events."

"Additionally," Whitley noted, "levee design standards often rely on historical data, which can be sparse and non-continuous across Australia. We cannot solely depend on human observations since weather systems are capable of producing events beyond our historical experience, such as the 2022 east coast floods."

The Senate committee's hearings, which took place in Ballina, NSW, on Thursday and Brisbane on Friday, saw testimony from community representatives and councils who voiced their frustrations about insurers' pricing and response strategies post-disaster. Suncorp and RACQ Insurance were the only insurers to appear before the committee.

When questioned about climate change's effect on premiums, Dr. Whitley commented, “Addressing climate change might cause a minor impact, perhaps smaller than the annual inflation rate, typically under one percent year-on-year. However, it is crucial not to overlook natural climate variability's role."

He further explained that climate change is expected to increase the frequency and severity of extreme weather occurrences. "Predicting the rate of this change is challenging due to natural climate cycles and fluctuations," he said. "It's difficult to attribute specific weather events solely to climate change. Nevertheless, such events offer clear indications of shifting risk profiles, which we must factor in when determining insurance premiums."

This perspective underscores the importance of differentiating between the inherent risks of natural variability and the additional layer of complexity introduced by a changing climate, presenting ongoing challenges for both insurers and communities in adapting and mitigating risks effectively.

Published:Tuesday, 13th Aug 2024
Source: Paige Estritori

Share this news item:

Insurance News

Clear

Asbestos Scare Leaves Hospitality Business Uninsured 04 Jul 2025: Paige Estritori The discovery of asbestos-contaminated mulch in a Sydney park led to the cancellation of a festival, resulting in significant financial losses for a hospitality business. Despite these setbacks, the company's claim for coverage under its business interruption (BI) policy was rejected. - read more

Landmark NSW Decision: Dog Walking Costs Covered in Car Crash Injury Claims 03 Jul 2025: Paige Estritori In a groundbreaking decision by the NSW Personal Injury Commission, an insurer has been directed to cover the costs of dog walking services for a car crash victim. The commission ruled that these services classify as domestic assistance under the state’s Motor Accident Injuries Act. This case could pave the way for broader interpretations of 'attendant care services' for claimants. - read more

Extreme Weather Drives $1.8 Billion in First Half Losses for Australian Insurers 03 Jul 2025: Paige Estritori Extreme weather events in Australia have resulted in significant financial impacts for insurers, tallying $1.83 billion in losses during the first half of the year. This comes as insurance companies gear up for further claims linked to ongoing severe weather in New South Wales. - read more

ClearView Names New Underwriting Head Amidst Strategic Changes 30 Jun 2025: Paige Estritori ASX-listed life insurer ClearView has announced the appointment of Peter Tilocca as Head of Underwriting, coinciding with key updates to its underwriting standards and definitions. Tilocca's extensive two-decade career in Australian underwriting includes leadership roles at Zurich, Noble Oak, One Path Life, and RGA Australia. His new role with ClearView commenced on 30 June. - read more

Ombudsman Supports Theft Claimant in Home Business Coverage Dispute 30 Jun 2025: Paige Estritori A recent case has seen a policyholder triumph over her insurer after the Australian Financial Complaints Authority (AFCA) ruled in her favour following a contentious dispute regarding home business operations. The controversy arose when the woman's theft claim was denied by her insurance provider, IAG, over allegations of fraudulent misrepresentation about the use of her rental property. - read more