Business Insider Australia

The insurance bill from the NSW and QLD floods is nearing $600m - but the true cost will be much higher, say financial counsellors

Business Insider Australia logo Business Insider Australia 9/04/2021 09:24:23 David Adams
Lisa Maree Williams/Getty Images Lisa Maree Williams/Getty Images
  • The insurance industry estimates the damage bill from last month's flooding in NSW and QLD will near $600 million.
  • But financial counsellors say the true cost will be much higher, after countless small businesses faced the disaster without coverage.
  • "It's not a good news story that they're not contacting us about insurance," said Helen Davis, general manager of the Small Business Financial Counselling Support Line.

  • Visit Business Insider Australia's homepage for more stories.

The damage bill for last month's once-in-a-century flooding in New South Wales and Queensland is nearing $600 million - but the true cost will be much higher, according to financial counsellors, who say countless small businesses faced the disaster without insurance.

Two weeks after severe rainfall ravaged New South Wales's North Coast and portions of south-east Queensland, the Insurance Council of Australia (ICA) now estimates losses of $567 million, stemming from 37,858 individual claims.

The ICA, which declared the disaster an insurance catastrophe, says assessors have flocked to the impacted regions to assist in the recovery process.

While many individuals and businesses face an anxious wait for compensation, Helen Davis, general manager of the Small Business Financial Counselling Support Line, fears the full financial impact will exceed those estimates.

The helpline, established after the horrific 2019/2020 bushfire season, provides free financial advice to small firms and sole traders in financial distress.

Yet "very few" flood-affected businesses sought assistance with insurance claims, Davis said, because "what we've seen in small businesses is they don't have insurance.

"So it's not a good news story that they're not contacting us about insurance. It's a concerning story, in that they're not insured."

It is hard to estimate how many businesses went without insurance due to the cost of surging premiums alone, Davis said.

But the helpline has "seen examples where a farmer might insure their home, but decide to take the risk on the shed and the fences."

Notably, the industry itself is demanding further government support to minimise flood risks, thereby driving insurance prices down.

Steve Johnston, CEO of insurer Suncorp - which expects to pay out as much as $250 million in claims linked to the recent flooding - said "as a country, we need to address how we can protect homes in flood-prone regions through government spending in mitigation infrastructure."

In October, the ICA also backed calls from the Australian Prudential Regulation Authority to further invest in mitigation strategies to protect high-risk communities from cyclones, floods, and bushfires, with the knock-on effect of lowering premiums.

Yet any investment in mitigation strategies may come too late for businesses which struggled through bushfires and pandemic lockdowns before facing the recent downpours - let alone the cessation of JobKeeper and relaxed insolvency regulations.

"The hardest thing for them is the uncertainty of, 'When will it be better? How long is this going to last?'" Davis said.

She expects calls for assistance to linger long after the initial disaster response is through.

"I think once people are over the immediate disaster response in terms of 'Where do I sleep, what am I doing, and how do I get forward and start thinking about getting businesses back on track?', that's when mostly the calls come through," Davis said.

Eligible NSW residents impacted by the floods can access the lump sum Australian Government Disaster Recovery Payment, and those who've lost income due to the disaster can apply for the Disaster Recovery Allowance.

Small business owners and sole traders seeking free financial counselling can contact the Small Business Financial Counselling Support Line on 1800 413 828.

9. huhtikuuta 2021 12:24:23 Categories: Business Insider Australia

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