Rising water damage repair costs and the impact of claims preparers have emerged as issues for the industry in the wake of the Townsville floods this year, the annual Claims Convention was told today.

Insurance Council of Australia (ICA) GM Risk Karl Sullivan says the costs in Townsville have been “much higher” than Brisbane in 2011, with the industry under pressure to replace materials regardless of their condition.

Claimants often assert that materials may have been exposed to sewage, or couldn’t be adequately cleaned and present a health risk.

Mr Sullivan says that while people have received new floors, parts of walls and bathroom fitouts, the extra work has implications for the assessment of costs in future catastrophes.

A local, state and federal government forum is scheduled at the end of the month in Townsville where that issue will be raised, he told the convention in Sydney.

“They are happy that all the work is getting done, but they are now starting to realise that putting all that pressure on the industry to potentially replace a lot of material that didn’t need to be replaced is going to result in higher premiums,” he said.

Mr Sullivan says unethical claims preparers are adding friction to the claims process and creating issues for policyholders.

“There is a legitimate need for some professional claims management for some people who may be vulnerable and need that help,” he said.

“But unlike in Brisbane, we are now starting to see in Townsville quite rapacious activity from some of these stakeholders.”

Suncorp Manager Major Loss and Event Claims, Corporate and Specialty Glenn Green told the convention the nature of the Townsville catastrophe has led some residents to believe it was a rare flooding event that won’t happen again soon.

“There is still a degree of complacency in customers’ understanding of what their risk may be,” he said. “We have all heard about climate change; it could happen this season – you never know.”

The convention also heard that flood cover in general has been more successfully addressed after the Townsville disaster compared to Brisbane, when there was limited cover available and no standard definition of flood.

But Mr Green says flood insurance continues to be an issue in the commercial area, where it is largely provided on an opt-in basis.

The convention was told the industry is now more pro-active after catastrophes, and had a strong presence on the ground after the Townsville floods. Consumers now expect a faster response.

The Claims Convention is organised annually by the Australasian Institute of Chartered Loss Adjusters and the Australia and New Zealand Institute of Insurance and Finance.