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Planning Ministers are developing a national standard plan on land use, stating that “the days of developing on floodplains needs to end”. In the Q2 Corporate Insurance market update, we share more on what these potential changes could mean for those seeking flood insurance coverage. You will also find updates on the business interruption class actions relating to the COVID-19 lockdowns and more developments to watch for the remainder of FY23.
Three years after COVID-19 lockdowns impacted many Australian businesses, preliminary hearings were held in the Federal court in early December 2022 for four business interruption class actions. The core issues in dispute are around the application of the 20 km radius clause, with businesses being required to prove that patrons within the 20km radius were affected and unable to attend the business premises. Insurers are taking the view that the class actions should not proceed, and the bar of proof is significantly high to trigger the policies. We will be monitoring the outcome closely and providing updates as the situation develops.
As the aftershocks of the flood events are felt throughout Australia, Planning Ministers are developing a national standard on land use, stating that “the days of developing on floodplains needs to end”. This is a welcome move by the wider insurance industry, as many Australian policyholders will find it increasingly difficult to secure adequate or affordable flood insurance coverage if they have high-risk exposed locations. The National Cabinet is also pushing forward reforms to the Disaster Recovery Funding Arrangements to improve insurance affordability. This comes as the Federal government is due to introduce mandatory standardised reporting for insurers with climate-related risks to their shareholders and the wider public.
January 1st of each year marks the date for catastrophe reinsurance renewals. Reinsurance (insurance for insurance companies) is a way for insurance companies to spread their risk and keep the balance sheet stable.The outcome of these negotiations is very important because it can flow on to policyholders. This year, reinsurance renewal negotiations were considered extremely challenging, with a wide range of global events weighing heavily on the market. Some of the events include the Australian floods, the War in Ukraine, Hurricanes in the U.S., and rising inflation and interest rates. Insurance companies will look to pass on the increases to policyholders by way of property insurance price rises for some homes, business buildings, and other property insurance and will closely scrutinise where they underwrite risks by restricting areas that are known to be impacted by storms and floods. Discover our full article to understand the key factors impacting reinsurance and renewal outcomes for the year.
