As insurance companies in Australia dig through 35,000 insurance claims for buildings from the recent bushfire catastrophe fuelled by the summer heat, some notable trends are emerging.
According to Karl Sullivan, Head of Risk and Operations at the Insurance Council of Australia (ICA), these new trends could just turn out to be “instructive in terms of planning and resilience”.
In his LinkedIn post, Mr Sullivan noted that 74% of all damaged buildings had been built before 2009, a time when more stringent standards were introduced in the construction industry.
He added that the median claim for the pre-2009 buildings was 1.4 times more than the new stock, proving that older stock was more susceptible to loss, besides being more costly to rebuild or repair.
New Buildings Are Safer
“New buildings are safer for our customers, less likely to suffer damage and often a better underwriting risk,” he wrote.
Mr Sullivan further noted that 99% of all losses incurred were either on or within 500m of land considered to be highly prone to bushfires for purposes of building design.
“Planners must continue to take into account hazard overlays produced by relevant agencies,” he said.
“With the exception of Victoria, all state governments make mapping available to assist with good decisions.”
Insured losses currently stand at $2.26 billion, making the disaster one of the worst bushfire catastrophes ever recorded.
The biggest loss was incurred during the Ash Wednesday in 1983, with the figure standing at $2.3 billion (normalised dollars).
According to data from ICA, 81% of losses incurred last summer took place in NSW, with Victoria and South Australia recording 8% each and 3% in Queensland.
Hundreds Of Fires Across Queensland And New South Wales
During the bushfires, scores of people lost their lives and thousands more were displaced as the dangerous weather conditions in parts of Australia especially New South Wales and Queensland raged on, and hundreds of fires lit across the two states.
The greater Sydney area, the country’s largest city was also severely affected, receiving a “catastrophic” warning particularly for the northern and southern parts of the city.
Millions of hectares of land were destroyed by the summer bushfires and hundreds rendered homeless after homes were razed down in various states especially Queensland.
During the catastrophic fires, thousands of people had to be evacuate to centres until it was declared safe for them to return to their homes.
The affected states declared a state of emergency, a decision that granted fire officials the discretion to exercise control over Australia’s government agencies.
The fires led to closure of schools across the affected states as firefighters battled the dangerous flames. At some point, New Zealand firefighters had to be flown in to assist the Australian emergency crews who were overwhelmed.
Besides the devastating impacts of bushfires on lives and property, it goes without saying that other industries have been seriously affected with the insurance sector being the most hit. For most insurers, the impact on their risk pools has been from loss of life and destroyed property as a result of bushfires.