Marty Sadlier, the director of MCG Quantity Surveyors (MCG) – a national firm specialising in building insurance replacement cost reports, construction cost estimates, and property tax depreciation schedules – has warned that the heavy rainfall and flooding in Queensland and New South Wales (NSW) could trigger a “devastating wave” of underinsurance.
On March 8, the Insurance Council of Australia (ICA) reported that insurers in Australia received 96,844 claims related to the severe weather event in the two states, with the estimated current cost of claims hitting $1.45 billion, subject to a detailed assessment of claims as loss adjustors move in over the coming weeks.
Noting the destruction in Queensland and NSW and the increasing number of claims related to the weather event and estimated cost of claims, Sadlier warned that things could get even worse as many people realise they are “woefully underinsured.”
“The tragedy is that we predicted this very thing months ago – and it was entirely preventable,” Sadlier said.
Sadlier noted the underinsurance crisis in June 2021 when various factors saw building costs skyrocket in the wake of the COVID-19 pandemic – and it will only worsen in the future.
“Prior to the pandemic, insurance council numbers suggested 83% of owners were already underinsured. We now believe the percentage is far higher – in fact, I'd be surprised if it wasn't closer to 100% of owners at risk right now,” he said.
As the Australian insurance industry braces itself for the looming underinsurance crisis, the ICA has called for all Australian governments to double federal funding to $200 million yearly until reaching $2 billion over the next five years to make the country more resilient to natural catastrophes.
In a policy platform, the ICA outlined six measures to make at-risk homes and communities more resilient to floods, cyclones, and bushfires to save governments and households at least $19 billion by 2050.
