The Federal Government has announced a parliamentary inquiry into insurers’ response to last year’s devastating floods. 

Flooding hit Northern NSW and South-East Queensland in February and March, the Hawkesbury-Nepean in July, across NSW, Victoria and Tasmania in October, and in the Central West of NSW in November. 

The Insurance Council of Australia (ICA), which has already commissioned its own independent review, says those events have so far cost $7.17 billion in insured losses from more than 300,000 claims. 

Financial Services Minister Stephen Jones says the inquiry will take a “whole‑of‑economy view” of ongoing challenges brought about by intense and frequent floods. 

“The inquiry will investigate the preparedness of insurers to respond to the frequency of these events,” the Government says. “It will also consider supply chain issues, skills and labour shortages, claims handling, and communication with policy holders before, during and after these devastating events.” 

Insurers have admitted that the large volume of claims combined with workforce and supply chain issues put their systems and processes under immense pressure. 

“Any review that supports the ability of insurers to improve how they carry out their crucial function is welcome, and we look forward to participating,” ICA CEO Andrew Hall said. 

“Following three years of La Nina conditions and the pandemic, the 2022 floods stress-tested the systems insurers use to respond to customers. 

“This was exacerbated by issues such as a shortage of expert assessors, building labour and materials constraints, and the complexity of recovery and resilience programs delivered by state governments.” 

ICA also says the inquiry should examine the impact of state insurance taxes on premium costs and the legacy of past decisions on land use planning and disaster mitigation. 

At last week’s inquiry launch in flood-hit Eugowra NSW, local MP Andrew Gee attacked insurers for a “lack of action” and denying claims. 

“We’ve seen stories and heard stories of a very cold‑hearted, mean‑spirited approach, a callous approach,” he said. 

See Analysis.