Sunday, October 11, 2009

An Australian insurer adds flooding to its core coverage

Danny John in the Sydney Morning Herald (Australia): …Insurance Australia Group has started to make flood cover an automatic part of its customers' policies. The first areas to benefit are NSW, Tasmania and the ACT. The cover remains an option in South Australia and Western Australia. IAG hopes to introduce flood insurance in Victoria and Queensland once it has the necessary information to show which customers are most at risk.

News of the change was quietly disclosed in IAG's annual report last month. About 98 per cent of IAG's existing and new customers in the first regions to get the cover are automatically included. But the remaining 2 per cent, those considered to be in high-risk areas, will have to pay higher premiums.

This payment will reflect how likely and how seriously their homes and property could be affected by floods, said Andy Cornish, the recently appointed head of the company's Australian operations.

The changes for existing customers started to take effect in August and follows a concerted advertising push by its big rival the Suncorp-owned GIO, whose flood cover pre-dates that of IAG's. Customers are being given the choice of whether to pay the higher premiums or to stick with their existing cover and take the chance that they will not be hit by a flood.

But the insurers are also warning that there is a trend for an increasing frequency and severity of major weather events such as floods - a factor being linked directly to climate change….

An aerial view of Brookvale, a suburb of Sydney, shot by Трансаэро (Transaero) , Wikimedia Commons, under the Creative Commons Attribution ShareAlike 3.0 License

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