Many natural disasters are now better described as man-made, according to LMI Group MD Allan Manning.

Funds spent by every level of government on flood mitigation since 2006 total just $26 million, he says.

“You can’t just expect insurance companies to keep paying for these man-made disasters,” he told brokers at the Zurich Generation Z forum in Melbourne last week.

“Australia has more than 400 rivers where we have put houses and factories on floodplains. Floodplains are for floods.”

After bushfires, houses are rebuilt to ensure leaves do not get stuck in gutters and with double-glazing that reflects heat, he says. But homes in flood-prone parts of Queensland are no longer built on stilts.

“A lot of these have become man-made disasters,” Dr Manning said.

He also discussed the relationship between industry associations, comparing Australia with the UK, where industry bodies for insurers and brokers are “completely separate”.

“In Australia, I think [the National Insurance Brokers Association] and the [Insurance Council of Australia] are far too close,” he said.

“They’re just a social club, really. That’s my view. I could be wrong, you might disagree with me, but I think they’re too close.”

Panellists also discussed the language used to talk to consumers about insurance.

“It is a very powerful word: protection,” Dr Manning said.

Business strategist Michael Harrison says he keeps a record of his conversations with clients and always asks them to speak to him if there is anything they do not understand.

Panellists discussed directors’ and officers’ cover, emphasising that directors need more protection than they think.

Dr Manning says SME directors should have at least $2 million cover each, while directors of a large company need at least $10 million.

This will cover legal fees only, not damages, he says.

Consultants who act like directors can be held to be directors under the Corporations Act, according to Millens lawyer Keith Hanslow.

Panellists also emphasised the importance of business interruption insurance and business continuity plans for cyber threats.