Far North Queensland flood not a cyclone event under federal government’s reinsurance pool

Far North Queensland flood not a cyclone event under federal government’s reinsurance pool
  • PublishedDecember 20, 2023

Sure Insurance, which only covers customers in regional Queensland, already has 800 claims related to ex-Tropical Cyclone Jasper, and there will be more to come.

It is one of 11 insurers that signed up to a national scheme known as a “reinsurance pool” — a kind of insurance for insurers — in an effort to keep premiums down after cyclones and other disasters.

But Sure Insurance managing director Bradley Heath said the system was not working as intended, costing insurers far more to handle claims from the flood disaster.

He said the national fund’s coverage for insurance companies would not have an impact on insurance payments for individual’s claims. 

A 30-metre section of the road pavement on Holloways Beach esplanade completely missing with flood water rushing through
Casurina Street has been dubbed “Jasper Creek” by  Holloways Beach locals after flooding undermined a 30-metre section of the road.(Supplied)

The government’s reinsurance pool was created in 2022 under the former Coalition government, after a long campaign from North Queensland MP Warren Entsch.

But insurers say the pool has a critical flaw in its conditions — to be covered, a cyclone event can last no longer than 48 hours once declared over by the weather bureau.

Ex-Tropical Cyclone Jasper passed that deadline on Friday.

It means that in the federal government’s view, the 1,150 millimetres of rain that fell on the famed Kuranda Railway Station on Saturday, Sunday and Monday are not considered part of the cyclone event.

Nor are the devastating floodwaters that have washed through people’s homes, trapped them in trees and on rooftops, and cut roads across the north since Friday.

Floodwater over Stewart Creek Road
Daintree residents have been cut off for days. (Supplied: Tony Bartels)

‘Extra costs likely to be passed on’

Sure Insurance managing director Bradley Heath said the gap would be a huge cost for all insurers, and that would flow on to customers.

“We’re disappointed in it and I’m sure a lot of other insurers are,” he said.

Mr Heath said insurance companies called on the former federal government to cover all damage arising from a cyclone, but they were ignored.

“We will be lobbying the government in the weeks and months ahead to amend the legislation,” he said.

“Regrettably it will have an impact.

“These costs should have been covered by the pool if it was designed correctly — now that extra cost is likely to be passed on.

“It will impact the claims cost to insurers unfortunately.”

‘We’ve all been sceptical’

Emergency Services Minister Murray Watt said the government was looking at changing the scheme even before this latest disaster.

He said when the scheme was introduced, there were promises it would reduce premiums, “but we were sceptical about it, and limiting it to cyclone times”.

Mr Watt said he was working with Assistant Treasurer Steven Jones, who held responsibility for the pool, on what changes could be made.

“Obviously, there will be additional cost if we do widen it and we need to think about that carefully,” he said.

“We’ve all been sceptical [about whether] the re-insurance pool would be as effective as was claimed, and unfortunately, we seem to be seeing that now.”

Earlier this month the Australia Competition and Consumer Commission (ACCC) shared warnings about limits placed on the fund.

When Cyclone Ellie struck the Northern Territory and northern Western Australia in December last year, the pool would have covered the damage it caused only between December 22 to 25.

But in the week following, relentless rainfall caused record flooding and cut off parts of the Fitzroy Valley, forcing the evacuation of 200 people.

“Insurers highlighted that the heaviest property damages from the cyclone arose after the 48-hour coverage window closed, particularly in relation to cyclone-related flooding.


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