From the Newsroom

Parliamentary Inquiry into Insurers’ response to 2022 floods

The Albanese government has announced a Parliamentary Inquiry into Insurers’ response to the devastating 2022 floods, the costliest disaster in Australian history, following numerous complaints from the Northern Rivers region.

Assistant Treasurer Andrew Jones said the inquiry will take a whole‑of‑economy view of the ongoing challenges faced by intense and frequent flood events.

“The inquiry will investigate the preparedness of insurers to respond to the frequency of these events,” he said.

“It will also consider supply chain issues, skills, and labour shortages, claims handling, and communication with policy holders before, during and after these devastating events.

The 2022 floods in South‑East Queensland and NSW are the costliest natural disaster for insurance costs in Australian history.

“As of June 2023, the ICA estimates the February‑March 2022 floods in South‑East Queensland and NSW have caused $5.87 billion in insured damages,” Mr Jones said.

“This is why the Federal Government has formalised its commitment of up to $1 billion over five years from 2023‑24 (up to $200 million per year) to invest in measures that better protect homes and communities from extreme weather through the flagship Disaster Ready Fund.

“The Federal Government also announced in last year’s October Budget, a $22.6 million investment towards initiatives aimed at helping reduce the cost of insurance in communities at risk of natural disasters.

“This includes the establishment of the Hazards Insurance Partnership, a formal arrangement between the Federal Government and insurance industry to engage on issues of disaster risk reduction.

Member for Lismore Janelle Saffin welcomed the announcement of the inquiry and reiterated her call for a government-based insurance program.

She said the program could function similar to the Northern Australia Cyclone Reinsurance Pool, which is backed by a $10 billion government guarantee.

“Lismore was the epicentre of the Northern Rivers floods and right now we are seeing a situation unfold where a large swathe of South, North, East and Central Lismore residents are receiving letters from their insurers informing them that they are now uninsurable,” she said.

“Not only does this leave homeowners carrying all the risk if something happens to their homes, it also leads onto a situation where their houses will become unsellable, unrentable and cause banks to decide the risk is too great for them and thus foreclose on houses still mortgaged.”

“The need to implement a scheme such as this is urgent and necessary, and the Federal Government is best placed to implement it given they have the ability to raise the necessary revenue needed to fund it.”

The Insurance Council of Australia also welcomed the announcement of a Parliamentary Inquiry.

2022 was a record year for insured losses, driven by flooding in Northern New South Wales and South-East Queensland in February-March, in the Hawkesbury-Nepean in July, across three states in October, and in the Central West of New South Wales in November.

Those events have so far cost $7.17 billion in insured losses from more than 300,000 claims. 

Insurance Council Australia CEO Andrew Hall said insurance is vitally important to Australian families and business and to the economy, giving people and businesses the protection and confidence to grow and prosper.

“In 2022 insured losses across all categories totalled $36.5 billion from 5 million claims – meaning last year one quarter of adult Australians made an insurance claim.” he said.

“Any review that supports the ability of insurers to improve how they carry out their crucial function is welcome, and we look forward to participating.”