Deloitte to review insurer response to record 2022 floods

The Insurance Council of Australia (ICA) has appointed Deloitte to undertake an external review into the insurance industry’s response to record floods that struck Queensland and NSW early last year, and identify what could be improved in responses to future extreme weather events.

Insurer response times, claims and complaints handling, resources deployed, communication with policyholders and engagement with stakeholders will all be examined as part of the review.

Deloitte will also seek feedback from representative groups of affected policyholders in significantly impacted areas and establish a web portal for individual policyholders to provide their perspective.

The final report, including recommendations for insurers, is expected by the third quarter.

The floods – Australia’s costliest extreme weather event and listed by Munich Re as the second costliest insured event in the world last year – produced more than 240,000 claims with insured losses of $5.81 billion.

A host of new rainfall records were set during the extreme February 22 to March 9 event, and many areas received more than half their average annual rainfall total in just a week.

ICA CEO Andrew Hall says the floods created significant challenges for the insurance industry in addressing an “extraordinary” volume of claims across a very wide geographic area.

The floods “tested the systems insurers use to respond to customers,” Mr Hall said, and raised issues such as a shortage of expert assessors, building labour and materials constraints, and the complexity of recovery and resilience programs delivered by state governments.

“Insurers have agreed it is timely to review the industry’s response to identify best practice and what could be improved when responding to future extreme weather events,” he said, noting more than 83% of claims are now closed.

A range of stakeholders will be consulted, including local governments and elected representatives, regulators and consumer groups. It will examine the impact of regulatory requirements, government agency programs and policies and their interaction with insurers, as well as supply chains and labour constraints.

Deloitte has significant experience across insurance and financial services, ICA says, including claims and complaints management and responding to crises.

The review will identify lessons learned, both from good practice and those requiring improvement, to “better prepare and inform the industry’s response to future extreme weather events in a changing climate,” ICA said.