It’s 10 years since the Wollongong floods exposed the insurance industry’s mixed attitude to dealing with flood cover and the conflicts that inevitably follow.

The NSW city, built on a narrow plain between the sea and a steep escarpment, was a disaster waiting to happen when it experienced 640mm of rain in August 1998. About 372mm fell on one day – August 17.  

Water swept down overloaded drainage systems and was trapped by the roads and railway embankments that follow the line of the coast. Two people died and 37 were injured. Insurers declined 437 claims out of 4816, mostly because the damage was caused by flood.

In an article in the Illawarra Mercury last week, writer Paul McInerny recalled the community’s anger when insurers “turned their backs on a devastated and demoralised city with a blanket rejection of claims”.

“In a passionate outpouring of anger and disgust, the community rallied to challenge a hard-line approach to policy fine print about what constituted a flood rather than a storm.”

Over the days following the floods the Mercury served up plenty of such emotive language. It launched a popular campaign to “name and shame” insurers which wouldn’t pay flood claims. It was brutal, personal and unfair, involving such tactics as mass rallies outside the offices of NRMA and QBE in Sydney and public pillorying of company managers. It found plenty of support from people who should have known better. Even the Prime Minister and Governor-General joined in.

“People power ultimately won the day,” Mr McInerny wrote last week. “The NRMA was the first to buckle and GIO followed. The smaller outfits slowly fell into line. It was a major victory for decency and fair play.”

In fact, seven insurers buckled and agreed to pay flood claims, but another nine didn’t. And decency and fair play had little to do with it. The Mercury campaign gradually faded from view, possibly helped along by the revelation in NIBA’s Insurance Broker magazine that a senior writer at the newspaper who wrote many critical articles had a $50,000 flood claim outstanding.
 
Last week’s commemorative article quotes ICA spokesman Paul Giles saying that today the industry's responsiveness to disasters has improved “in leaps and bounds”. He doesn’t elaborate. Mr Giles also says ICA has focused its energies on “the Flood Project”, which is described as a move to find consensus and greater clarity through standard definitions of what comprise storms and floods. “Finding a national definition has been a fundamental problem for generations.”

If we’ve had to wait “generations” for a definition that organisations like NIBA and ASIC have strong doubts about, how far away can something rather more substantial – like widely available flood cover – really be? It was a point subtly raised last week in a speech by Federal Assistant Treasurer Chris Bowen, who without naming the insurer did praise it for recently deciding to offer standard flood insurance – “the type of flood cover people are after, such as flooding from rising rivers”.

The unnamed insurer could have been one of several already offering limited forms of flood cover. The most wide-ranging initiative has come from Zurich, and judging by the hostility shown by other insurers to its decision, an industry-wide solution may be some way off.

However, these days the industry does tend to adopt a more conciliatory approach to large-scale flooding – last year’s NSW Central Coast floods are a case in point. And in the past 10 years other countries’ solutions to the problem of flood cover have been studied and co-operation from state governments has increased. But some climate experts say we already know enough to frame a wide flood insurance solution.

Ten years ago after so many insurers buckled under the weight of a cynical public and media campaign that damaged their public standing and credibility, the industry remains just as vulnerable to it all happening again when the next flood strikes.