Summer disasters strike again
The insurance industry has again faced a series of summer disasters, with major bushfires in Western Australia, Victoria, South Australia and New South Wales.
In January more than 100 bushfires swept across Victoria, South Australia and New South Wales as a heatwave pushed south-eastern Australian temperatures above 40 degrees.
On January 17 alone, there were 68 bushfires burning across Victoria; 43 in NSW; and 20 in South Australia.
ABC news reported a 3,000-hectare bushfire in Victoria's Grampians caused a 12-km convection column that created thunderstorms and lightning.
South Australia saw many homes destroyed by January fires in the Flinders Ranges, Murraylands and Southern Barossa Valley.
Bushfires in Parkerville, WA, burned more than 650 hectares and destroyed more than 40 homes.
The bushfires again highlighted the problem of domestic underinsurance. It is heart breaking for families who have insufficient funds to rebuild their homes because they have not kept pace with updating sums insured at renewals. Worse still, some families have no insurance.
In a study for its Understand Insurance website, the Insurance Council found most Western Australians were uncertain about whether their household insurance covered bushfires. The study found WA had the country’s highest levels of household underinsurance, with 88% compared with a national average of 83%.
ICA said by January 16, more than 300 claims had been lodged for WA’s Parkerville bushfires, with estimated insured losses of just over $15 million.
Again the insurance industry has been on the front foot in helping communities recover from disasters. ICA’s disaster recovery specialists spent time in bushfire-affected communities to work with local authorities and help policyholders with questions about claims.
The insurance industry is eagerly awaiting a decision on whether Australia’s High Court will grant leave for an appeal in the Great Southern case (Chubb v Moore) after New Zealand’s Supreme Court overturned a NZ Appeal Court decision in the controversial Bridgecorp case.
The decision has major ramifications for NSW, the ACT and the NT, where legislation mirrors s9 of NZ's Law Reform Act 1936.
In July, the NSW Appeal Court, in Chubb v Moore, had unanimously found an equivalent s6 charge did not extend to money payable for defence costs.
If the High Court agrees to hear the appeal, and follows the NZ Supreme Court’s lead in Bridgecorp, I image there would be a good case for legislative reform.
As NZILA president Craig Langstone points out in his column in this issue, the latest Bridgecorp decision means there is “now a difference between the law in NZ and Australia. Given most insurers in NZ are either owned or managed by Australian insurers, any difference between NZ and Australian insurance law is regrettable”.
I urge you to read Craig’s excellent commentary on Bridgecorp.
Hamilton hosts AILA
The national conference will return to Hamilton Island this year on September 17-19. Many excellent speakers have been invited to attend. More details will be available soon, but it may be wise to search now for the best airfares. It promises to be a great conference in a great venue.
Flood class action
In the last issue of Resolve, barrister John Tesarsch wrote about the increase in class actions since the collapse of the agribusiness management investment scheme industry.
The trend to class actions is spreading further with the advent of litigation funding. Plaintiff law firm Maurice Blackburn is mounting a class action against the Queensland Government in a bid to compensate property owners who sustained damage in the 2011 Brisbane floods. The firm says the claim, which will be heard in the NSW Supreme Court, will seek more than $1 billion.
In Victoria, litigation is still in progress in a complex class action following the Black Saturday bushfires.
Insurers will watch the outcome of all this litigation with interest.
The changing landscape of the Australian insurance industry continues, with IAG proposing to buy Wesfarmers' underwriting businesses.
The Australian Competition and Consumer Commission (ACCC) is conducting an informal review of the proposed acquisition under s50 of the Competition and Consumer Act 2010.
However, given the competitive nature of the Australian market, I expect ACCC is unlikely to see the purchase creating a reduction in competition in the market.
NZ shakes again
The January 20 earthquake in NZ’s North Island is another reminder of the volatile seismic activity of our colleagues’ homeland.
Fortunately, the magnitude 6.2 quake did not cause much damage. By February 5, the NZ Government’s Earthquake Commission had received 2,950 claims.
NDIS to proceed?
Despite the change in Federal Government, I hope to see the National Disability Insurance Scheme (NDIS) proceed at a fast pace.
I hope Federal Treasurer Joe Hockey’s call for an end to “the age of entitlement” will not impinge on funding and support for the NDIS.
The NDIS will support a better life for hundreds of thousands of Australians with a significant and permanent disability and their families and carers, and is an extremely important scheme for Australian families affected by disability.