The Australian Financial Complaints Authority (AFCA) has so far received a relatively low level of bushfire-related claims disputes, Lead Ombudsman Insurance John Price told the Royal Commission into National Natural Disaster Arrangements today.

Mr Price says AFCA has received 68 insurance disputes with a total claim amount of $6.85 million for the bushfires, compared with more than 14,000 general insurance matters for all of the last financial year.

“I think that indicates to me, at this stage, that the insurance industry has performed reasonably well and proactively in dealing with these matters,” he said.

AFCA says 47 complaints have been dealt with already and it has recommended compensation payments of around $3.3 million, leaving 21 live matters. A number of people had complained directly to AFCA, which had referred the matters back to insurers, he said.

Mr Price says insurers have improved their response to natural disasters over the past decade, have been more conciliatory in their approach and more proactive in working with local communities and consumer groups.

“We are seeing that result in a reduction in the number of disputes coming towards AFCA in these type of complaints,” he said.

Earlier he said there had been five potentially “systemic issues” referred to the authority, with four of those judged not systemic and one still being examined.

Mr Price called for more debate around standard levels of cover given the failure of product disclosure statements in providing disclosure, and noted suggestions around medical-type arrangements with bronze, silver and gold levels of cover.

“I think the debate needs to be really accelerated there so we can overcome these problems,” he said.

Mr Price also flagged that affordability problems may become more of an issue in the future, particularly with recent events and potentially higher reinsurance costs.

“In the case of Australia, we have had seven major natural disasters in the last 12 months and that will impact upon the affordability of insurance for everybody,” he said.

Data provided by the Insurance Council of Australia (ICA) to the royal commission showed that 0.66% of claims had been denied so far for the bushfires, which compares to a claim denial annual average across all lines of 3.9%.

“I just draw that out as something which is standing out for this particular event,” Counsel Assisting Kess Dovey said.

As of May 21, insurers had received 34,679 bushfire claims, totalling $2.26 billion. Some 57.85% of domestic property claims were closed.

Yesterday, Risk Frontiers GM Ryan Crompton told the commission an economic loss database should be created to complement ICA insured loss information that is frequently relied upon for natural disaster studies.

“It is often used and the way it is extrapolated to an economic loss is fairly basic and there’s a lot of information which would be held in various government departments that could be pulled together to create an economic loss database,” he said.

Risk Frontiers also stressed the importance of land use planning, with its research showing the high level of destruction of homes located within one metre of bushland during summer catastrophes.

More than 30% of homes burned down in the NSW South Coast fires last summer were only one metre from adjacent bushland, while 80% were within 100 metres, it found.

On Black Saturday in 2009, a quarter of destroyed structures in Kinglake and Marysville were within one metre of bushland.

“Distance to bushland is demonstrably the most important variable that determines building vulnerability to bushfire,” Dr Crompton said.

“The research does highlight the importance of land use planning in bushfire prone locations.”

Actuaries Institute Climate Change Working Group convener Sharanjit Paddam told the commission that monitoring of tropical cyclones as they cross the coast should be improved given rising risks and with Australia lagging behind US capabilities.

Mr Paddam, also head of Environmental, Social and Governance Risk at QBE, says anemometers that measure wind speed and directions should be upgraded and weather stations improved as part of efforts to capture more landfall data that can be used in risk modelling.

In the US, aeroplanes are regularly flown into hurricanes to gather data about how they’re behaving as they threaten coastlines.

“We don’t have that facility in Australia and I think as the risk increases over time, understanding the behaviour of land-falling Australian tropical cyclones, we do need more observational data,” he said.

Mr Paddam also called for improved local council data availability for the National Flood Insurance Database and for greater access to coastal inundation mapping.