We understand that the past few months have not been easy for most. This month, CHU Underwriting Agencies share some of the impacts that recent weather events have had on the insurance industry and in turn how that affects our owners.

Australia is still reeling from the litany of weather events that have struck in recent times. And recovery from the aftermath of those events has been further exacerbated by several major issues.

Strata property owners, already feeling the impact of major events, such as the severe flooding on the east coast, probably can’t imagine how much worse it could get. But, according to the latest UN Climate Report, it’s very likely to. The report says current 1-in-100-year floods could occur several times a year

In 2021 there were a number of catastrophe events including bushfires, extreme weather events, cyclones, flooding, earthquakes and storms. These events have put added pressure on the insurance industry not only because of the high number of them, but also the severity of each.

MATERIAL SHORTAGES

With the world still recovering from lockdown restrictions, vital rebuild materials have been delayed, limited, or even unavailable. The shortages have seen major price hikes, especially for raw materials, such as timber.

Material shortages created by pandemic-affected supply chains has especially impacted on the construction industry. International chains have been severely affected because of reduced production overseas, and significant delays of inbound freight from Asia.

This has meant higher costs for repairs, including labour and material costs, as well as the cost to replace insured contents, particularly imported goods.

This has led to:

• 20% rise in average building claim costs in 2021 with weather events contributing 50%
• 7.1% increase in shipping costs in 12 months – Australia imports 20% of its timber
• Average building claim costs tripled in last 10 years

LABOUR & TALENT SHORTAGES

Builders are struggling not only with increased costs and material shortages but also labour shortages, often leading to lengthy rebuild delays. Covid related absences also play havoc with the scheduling of projects.

Another post pandemic impact facing industries is the talent shortage. The insurance industry is seeing the biggest gap between adverts and availability – job adverts are up 71.49% now compared to 2013 and candidate availability down 23.6%.

WHAT DOES IT MEAN

These issues have been amplified by the recent number of weather catastrophes.

One of Australia’s leading strata insurers, CHU, saw body corporate managers lodge some 2,527 new claims in less than three months from the Southeast Queensland/Northern NSW flooding and storms. The recent flooding is on track to be one of the biggest Insurance claims event in Australian history.

All of this is putting increased pressure on the insurance claims market.

HELP FOR OWNERS

However, one thing these disasters has shown is how the strata and insurance industries have quickly pulled together to help owners.

The body cooperate manager is often the first point of call when disaster strikes a property, playing a critical role in helping owners get back on their feet. Body corporate managers helping owners in the first hours after a claim occurs has seen significant positive effects on the extent of the damage sustained and therefore the work required to reinstate properties.

Body corporate managers and brokers work in tandem with insurers to help owners get back on their feet after major events.

AN INSURANCE TALE

As CHU’s newly appointed Head of Claims, David Gow’s first day coincided with the Lismore flood.

“In the case of an insurance claim, it may be the body corporate manager and the broker involved. With a claim that may impact multiple owners and units in a building, arranging and coordinating repairs can be complex,“ said Gow.

A member of CHU’s response team was instrumental in helping a vulnerable customer who needed extra support during the Lismore flooding.

“One of our adjusters received an urgent call from a manager advising there was a distressed, vulnerable customer at one of the sites,” Gow says. “Our adjuster was at the site, which was unsafe to live there, and the customer was distressed about moving out. Having the adjuster there to guide him through the process and provide reassurance was critical to deal with the customer’s concerns. While this can be done over the phone, being there in person provides that extra level of comfort that the situation is in hand.”

This article was supplied by CHU Underwriting Agencies

Disclaimer: CHU Underwriting Agencies Pty Ltd (ABN 18 001 580 070, AFS Licence No: 243261) acts under a binding authority as agent of the insurer QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFS Licence No: 239545). Terms, conditions, limits, deductibles and exclusions apply to the products referred to above. Any advice in this article is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Before making a decision to acquire any product(s) or to continue to hold any product, we recommend that you consider whether it is appropriate for your circumstances and read the relevant Product Disclosure Statement (‘PDS’), Financial Services Guide (‘FSG’) and the Target Market Determination (‘TMD’) which can either be viewed at www.chu.com.au or obtained by contacting CHU directly on 1300 361 263.