Gold Coast venue for 2024 National Conference

AILA President's message – Melanie Quixley

Mark your diaries now for fun in the sun at the AILA 2024 National Conference – Sunny Side Up.

The dates are Wednesday 11 September to Friday 13 September.

The program for AILA’s 36th conference will be announced soon and it will have a particular focus on lessons learned for the insurance industry from natural disasters, examining potential short and long-term responses.

The conference organising committee is excited that Queensland Supreme Court Chief Justice Helen Bowskill has agreed to be the keynote speaker.

Keep an eye out for the sponsorship prospectus, too. We’d love to have a host of sponsors onboard to help defray costs for attendees and enable our partner organisations to boost their brands with a target audience.

Check out all the fun things to do on the Gold Coast here. Why not bring the family and take a holiday before or after the National Conference?

#sunnysideup2024

Inquiry reflects on flood impacts

The parliamentary inquiry into insurers’ responses to claims from the 2022 floods has been hearing submissions and much of the evidence is not flattering for the industry.

The House Standing Committee on Economics is due to report by 30 September 2024.

The inquiry is considering the experiences of people in dealing with their insurance companies and the challenges insurers faced in responding to a record number of claims.  

The inquiry’s terms of reference cover the floods in south-east Queensland and northern NSW in February and March 2022; in greater Sydney and the Hunter Valley in July; in Victoria, NSW and Tasmania in October; and in the central west of NSW in November and December.

Many people impacted by the 2022 floods were hit again by floods over the latest Christmas-New Year period, compounding the problems.

Committee chair Dr Daniel Mulino MP has said: “Many submissions articulate the struggles that residents faced, including long delays in damage assessments and repairs, claims being denied because of ‘wear and tear’ exclusions, inadequate cash settlements and poor communication, which all compounded people’s frustrations.

“Given the increasing frequency of natural disasters, it is critical that the insurance industry remains robust to withstand these challenges, and that policyholders can be confident they will be properly supported in future claims regardless of their insurer.”

Once the inquiry’s report is released, I expect there will be considerable changes in claims handling. It’s also likely the industry will examine new ways to handle the massive influx of claims that inevitably follow natural catastrophes. It may be that generative artificial intelligence and automated systems have a bigger role to play in processing claims faster. 

Global cat losses soar

Global broker Aon plc’s 2024 Climate and Catastrophe Insight report, released in late January, identified that global economic losses from natural catastrophes reached US$380 billion in 2023.
Insured losses were US$118 billion, with a protection gap of 69%. The 95,000 fatalities meant 2023 was the deadliest year since 2010.

Global insurance losses during the year were 31% above the 21st-century average, exceeding US$100 billion for the fourth consecutive year.

Earthquakes caused the most economic losses, while severe convective storms were most costly to insurers. New Zealand, Italy, Greece, Slovenia and Croatia all recorded their costliest weather-related insurance events on record.

The Aon report said 2023 was the hottest year on record with “unprecedented temperature anomalies”, and all-time highs observed in 24 countries and territories. 

Aon CEO Greg Case said: “Amid increasing volatility and complexity, there is a significant opportunity for organisations to become more resilient to the climate and catastrophe risks highlighted in our report. By working across the private and public sectors we are accelerating innovation, protecting underserved communities and better addressing the economic impacts of extreme weather to create more sustainable outcomes for businesses and communities around the world.”

Cyclone-prone regions’ premiums still high

The ACCC’s second annual insurance monitoring report, released in late 2023, showed home, strata and small business insurance premiums in northern Australia remained much more expensive in 2022–23 compared to the rest of Australia.
 
The Competition and Consumer Commission’s report said there were not yet any significant widespread price effects from the Federal Government’s cyclone reinsurance pool in 2022–23.

However, insurers only began joining the pool at the start of 2023 and most that have joined did so on or after July 2023. ACCC Commissioner Peter Crone said the pool was “still in transition”.

“The combination of insurers entering the pool at different times, the time required for insurers to fully implement pricing changes, and differing policy renewal cycles mean consumers may not see the full impact of the pool on their premiums for some time.

“There is also a range of other factors impacting [on] premiums, such as higher building replacement costs and global reinsurance market conditions. And a changing climate is expected to exacerbate extreme weather events in future,” he said. 

Mr Crone said the ACCC was optimistic the pool could achieve some premium savings and benefits for consumers at higher risk of cyclones. However, he said “other interventions” may also be required.