Be prepared for extreme events: Insurers

Aged care providers and healthcare organisations should check their insurance coverage aligns with their potential costs, industry experts have said, amid ongoing extreme weather events.

This week’s flooding across New South Wales and southeast Queensland again highlighted the potential disruption and disaster for vulnerable aged care residents, with estimated damage totalling more than $250 million.

Marsh Advisory Head of Claims Solutions, Luke Stratford, said organisations should check their policies to make sure they were adequate in the event of a major event.

“It’s important for aged and health care organisations to ensure their insurance and the limits they buy are aligned with the possible costs of activating their business continuity plan and any exposure they may have to repaying accommodation bonds as a result of damage to property.”

Last year a Sunshine Coast aged care home had to be evacuated overnight after their Coolum home was drenched with more than 200mm in two hours.

And during the 2020 summer bushfire disasters the Aged Care Quality and Safety Commission issued advice to providers on how to prepare for evacuations, including personal item grab bags, an evacuation plan with transport and alternative accommodation, and early-decision-making frameworks.

In a note to clients, Mr Stratford noted many businesses were assessing loss and damage and starting to put together an insurance claim.

“These can be some of the most stressful and critical moments for businesses,” he said.

“The impact and extent of damage from the heavy rain will become clearer over the coming weeks and months.

“As waters continue to flood areas across New South Wales, the risks for you and your supply chain are constantly evolving. It is important to act now and work closely with your broker/risk advisor and insurers to achieve the best possible outcomes.”

He said to make sure your organisation was actually covered for flood, given the technical nuances between policies.

“One important consideration is whether the damage is caused by an insured peril or an excluded peril,” he said. “For example, rainwater inundation is typically a covered peril under a property policy, but in some cases, flood can be excluded.”

A common flood exclusion – which gained prominence during Queensland’s widespread floods in 2010 and 2011 – is damage caused by water released from creeks, dams or lakes in a rising flood. While storm-flood damage is often included, rising flood waters are not.

Once a business is impacted by the weather event, Mr Stratford said there were processes to follow to make the claim easier to progress.

  • Record the events with lots of detail including videos or photos.
  • Provide your policy number, the name of the insured on the policy, contact details, location and extent of damage, and further actions required.
  • Identify the source of the damage and document evidence for the claim. “You are responsible for proving your claims,” he said.
  • Arrange for a dedicated person to manage the claim as this speeds up the process.
  • Appoint an independent claims advocate or claims preparer – a cost often covered under a policy – to assist you with the claim.
  • Make sure there is an understanding of the claim and the process, including what needs to be done and when.
  • Consider if the policy will actually cover the event? Floods can be difficult.
  • Maintain a record of costs and keep evidence of the expenses.
  • Keep the insurance company informed throughout the claim.
  • Don’t remove damaged items from the property until they have been assessed, unless required for safety or to minimise additional damage.
  • Stocktake and reconcile property, plant and equipment to determine the amount of damaged assets and losses.
  • Consider whether assets should be repaired or replaced, and seek advice from suppliers in writing.

Mr Stratford said flood-risk could be reduced through elevation, flood walls, pump stations and other physical barriers or diversions. But it remained critical to have an emergency plan in place including contact details for staff, suppliers and clients, as well as meeting times for key employees.

Earlier this week Insurance Council of Australia chief executive Andrew Hall said it remained too early to understand the extent of the damage but insurers had received more than 5000 claims in a few days.

The industry has deemed the events a “catastrophe declaration”, activating services and support.

“As many areas are currently inaccessible due to floodwater, insurers are expecting further claims in coming days as emergency services allow residents to return to their properties to examine the extent of their damage and losses,” he said.


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