Cover for flood – available or not?

Cover for flood

Cover for flood – available or not?

Flood events are a seasonal reality and will persist in the future, with increasing severity and mounting losses. So, what does this mean for insurance cover?

The past couple of years have witnessed catastrophic floods ravaging parts of the country, devastating communities and property owners, and resulting in massive insurance claims and significant losses for insurance companies.

Some of the most devastating floods in our history have occurred in the last decade, including the February/March 2022 floods that impacted Southeast Queensland and northern New South Wales.

According to the Insurance Council of Australia (ICA), these floods were the costliest natural disaster in history, with insured losses exceeding $6.1 billion across 243,000 claims. The ICA also notes that flood events accounted for more than 54 per cent of losses from declared insurance events in the last five years. In 2022 alone, there were over 300,000 flood claims, totalling more than $7.4 billion, making it a record year for flood losses.

Considering this, the insurance industry has been evaluating the feasibility of continuing to offer flood cover for properties located in high-risk flood zones.

To assist our landlord and agent clients in understanding the evolving insurance landscape, we have addressed some common questions related to flood cover...

What restrictions are on properties in high-risk flood zones?

While we offer flood cover to most properties across Australia, there is a small percentage of properties located in areas at significant risk of flooding. These properties fall within high-risk flood zones, and we are unable to provide policies for properties in these areas.

What does ‘high-risk’ mean?

High-risk refers to properties in flood-prone zones, determined by an assessment of flood risk based on flood maps and historical claims data.

Why are these high-risk properties not able to be insured?

Insurance is ultimately designed for the unpredictable, not for events likely to occur. Properties in high-risk flood zones are assessed as likely to flood, making them a known risk.

Is anything else being done to support those who have properties in high-risk flood zones?

The availability and affordability of insurance for properties is just one of several issues facing flood-prone areas. Governments at all levels, along with the property industry, building and construction industry, emergency services, and the insurance industry, are examining these issues and how to address them sustainably. Various factors, including where property development can occur, building codes, flood mitigations, resilience, and insurance gaps, are under review.

What tips do you have for looking after property in flood-prone zones?

With cover restricted in high-risk flood zones, it's more important than ever for property owners to protect their assets. The Insurance Council of Australia offers tips for safeguarding properties before and during a flood.