The Insurance Council of Australia (ICA) is pushing for a more unified approach to disaster planning across the insurance industry through its newly released Extreme Weather and Disaster Response Planning Guide, as extreme weather events continue to exact a heavy toll on communities and businesses.
The guide comes in the wake of the devastating CAT221 weather events in early 2022, which swept through New South Wales and South-East Queensland, leaving widespread destruction. The aftermath saw 244,000 insurance claims lodged, with payouts reaching $6.16 billion by August 2024.
A review commissioned by the ICA revealed significant gaps in the industry’s readiness, noting that while some insurers had well-developed disaster plans, others were ill-equipped to meet the demands of such large-scale events. A key recommendation urged the ICA to introduce a "baseline category" for extreme weather and disaster event management to align industry practices.
Thus, the ICA’s new framework encourages insurers to define clear criteria for what constitutes a disaster, establish governance structures to streamline decision-making, and create robust communication strategies for customers and stakeholders.
A notable feature of the guide is its emphasis on scalability, allowing insurers to tailor their plans based on company size, risk exposure, and event type. The guide also highlights the importance of ongoing stress testing and scenario planning to address vulnerabilities and enhance operational resilience.
These measures align with the broader principles outlined in the ICA Charter, which emphasises collaboration and community engagement at all stages of disaster management. Insurers are encouraged to align their individual response plans with these principles.
Rather than imposing a rigid standard, the guide offers a flexible approach that insurers can adapt to their size, risk exposure, and customer demographics. It also stresses the importance of continuous improvement, calling on companies to conduct stress testing and post-event reviews to refine their plans.
Although the guide is not prescriptive, the ICA believes it provides a practical starting point for insurers to meet growing community expectations.
