Insurers cash in on flood disaster


Insurance companies are collecting about $300,000 in interest every day they hold off paying the victims of Queensland’s flood disaster, said the February 28 Courier Mail.

The floods swept through the state in January. Six weeks later, just 10% of claims had been paid.

The insurance industry has raked in big profits in the past few years. The Courier Mail said “net profit for general insurers soared from $2.8 billion to $4.44 billion. Total assets jumped from $65 billion to $98 billion.”

Insurance giant Suncorp’s chief executive, Patrick Snowball, has predicted big rises in premiums in the near future as a result of expected higher reinsurance costs, arising from the unprecedented series of natural disasters that have hit Australia and New Zealand in recent months.

Meanwhile, the Queensland Council of Social Service (QCOSS) has warned that one-third of Queenslanders could fall into poverty if the government’s disaster recovery program fails to meet their needs, said the February 28 Courier-Mail.

The crisis in disaster insurance and relief systems underlines the need for urgent action to change our processes for dealing with the probability of the increasing frequency and severity of such events in future.

Australian Fabians (Queensland) program director Joff Lelliott advocated a national disaster insurance scheme, in a February 22 Courier-Mail article.

He said: “Given the scale and frequency of natural disasters in Australia, universal and affordable natural insurance operating in a less confrontational environment is urgently needed.

“A foundation of any new scheme would be pooling all natural disaster risks into a single new product class, as argued by reinsurance giant Swiss Re in several papers.

"A comprehensive, world-class natural disaster scheme would give Australia greater economic resilience and allow governments, communities and individuals to get on with rebuilding shattered lives, homes and communities more quickly and with greater certainty after disaster strikes.”

The problem with Lelliot’s proposal is that it still fundamentally relies on insurance by private corporations, in collaboration with government.

Socialist Alliance, by contrast, calls for a public, national insurance scheme, funded by taxes on the wealthy and big companies.

The federal government should step in to establish a publicly-owned and managed, not-for-profit insurance scheme to make sure rapid disaster relief and rebuilding of affected areas is carried out.