The January 18 fires cost insurance companies $350.7 million, according to the Insurance Disaster Response Organisation.
It puts it among the top half dozen in the list of Australia’s most costly disasters for the insurance industry and the second most costly fire in Australia’s history. The fires destroyed the most homes on a single day in Australian history.
IDRO National Co-ordinator Christopher Henri said the $350.7 million “contributes to a total of more than $9.1 billion of insured losses for natural disasters since 1967, with the largest being $1.7 billion for the April 1999 Sydney hailstorm, followed by the 1989 Newcastle Earthquake at $1.1 billion.”
Other pay-outs (in today’s dollars) include $837 million for the Darwin cyclone and more than $350 for the Ash Wednesday fires in February 1983.
Three thousand home and contents claims arose from the Canberra fires costing $199 million. The 151 commercial and industrial claims will cost an estimated $146.5 million. These included the claims for Mount Stromlo and the pine plantations. The fire claimed 411 motor vehicles costing $4.8 million. Some of the commercial and industrial claims are yet to be finalised. Virtually no domestic claim is outstanding.
Henri said, “The IDRO is designed to coordinate the response required in disasters so that the industry can work with government and emergency services to provide the best response and recovery service for the people who have been affected.
“Natural disasters cause anxiety for people because of, among other things, the feeling of impotence and helplessness they engender amongst victims.”
According to a report after previous Sydney bushfires, “The recorded experiences of past disasters has emphasised that the natural disaster itself is often followed several weeks later by a severe reaction from the affected community, referred to as the ‘second wave’. In a number of disasters it is considered that the second wave reflected greater community trauma than did the actual disaster and is usually the manifestation of a build-up in community frustration and anger over the perceived slowness of the recovery effort. Often the community simply does not know what is going on and this, coupled with their perception that they are being neglected, is what results in the second wave backlash.”
The ACT appears to have learnt from that experience by setting up the ACT Bushfire Taskforce, the Community and Expert Reference Group, chaired by Elizabeth Whitelaw, the Recovery Centre, the Bushfire Appeal and several inquiries.
Henri said, “The IDRO was set up to provide timely and efficient assistance to policyholders after a disaster and assist insurance companies and their agents by establishing contact with government at all levels. The IDRO is in essence a partnership of insurers, reinsurers, brokers, loss adjusters and the Insurance Enquiries and Complaints Limited which are all represented on the National Committee which reports to the Board of Directors of the Insurance Council of Australia.”
In the case of the Canberra fires, the disaster was of such magnitude that individual insurers set up hotlines the day after and went quickly to the scene. Some received claims on the day of the fire through their 24 hotlines.
On of the benefits of the computer age was that people whose policy documents were destroyed merely had to give their name and address on the hotlines to get details of their insurance policies. Those who could not remember which company they had insured with could ring an IDRO number to find out.
The NRMA had its Insurance Help Van on site on the Monday after the fire and set up. AAMI sent assessors in. However, before the end of the first week, the Recovery Centre had been set up in Lyons and insurance companies had a presence there. The ACT Bushfire Taskforce also appointed an independent insurance adviser, Mark de Kleuver, who was located at the Recovery Centre. He had 59 claimants who were dissatisfied with their insurer’s response and he resolved 56 of them with the companies fairly quickly. However, three remain outstanding.
There were many cases of under-insurance or no insurance. But those well insured had their claims met promptly. The NRMA said, “More than 1800 claims for motor, home, caravan and boats have already been paid out within weeks of the bushfires.”
The NRMA made immediate emergency payments to its customers in the first few days after the fire.
AAMI said, “In total, 365 AAMI customers lodged claims on their home insurance, including the 43 customers whose homes were total losses.
“Within hours of the first claim being lodged, specially formed teams arranged emergency funds, mobile phones and short and long-term rental accommodation for customers.
As soon as it was safe, teams of client managers, home assessors and senior managers visited customers’ homes and made settlement decisions on the spot. The first total loss assessments were made less than 72 hours after the fire, and all 43 were completed by the end of the first week. Most of AAMI’s customers received their total loss payments just nine days after the fire.
On the motor claims side, all AAMI’s claims were assessed and 49 total loss payments were processed just six days after the fires struck.”
The NRMA developed the Help Expo in March at the National Convention Centre. The Expo was aimed at providing reconstruction advice.