The frequency & severity of flood events in the Brisbane River basin & surrounding area have led to:
Severe capacity restrictions and the exit of many commercial insurers from the market
Increasing in numbers of self-insuring clients due to the withdrawal of capacity for flood
Claims assessments and payments being delayed due to disputes regarding the definitions and exclusions in the wording (e.g., flood definitions – pluvial/fluvial, property contents, inventory, etc.)
Key benefits
Our parametric covers offer an alternative solution
Fresh capacity:
Parametric products offer an alternative to un-insured risks.
Customised protection:
Flexibility and straight-forward structure tailored to clients needs
Transparency:
Certainty of capacity and pricing year on year
Timely claims payment:
Internet of Things (IOT) - On-site monitoring, public gauges, BOM & satellite imagery permit for real-time claims assessment & quick payout following a triggered event. Allowing clients, the flexibility to allocate funds towards repair costs that help their business return to their usual operations quickly.
With 3 consecutive years of La Niña, Australian corporates are left with an unaffordable flood threat in the traditional insurance market.
In terms of tangible & intangible losses, flood is Australia’s costliest natural-hazard related disaster. Since the beginning of this year, Australia’s exposure to flash and riverine flooding has been relentless. As the Bureau of Metrology (BOM) declares a third consecutive year of La Niña, the region is unable to absorb additional rainfall due to full dams and saturated soil, meanwhile traditional insurance capacity has all but dried up.
Challenges in traditional flood products and loss determination
As a result, the spike in premiums (a 26.4 % increase in some cases, despite not making claims) is not the only shortfall in traditional flood products. Following the February and March 2022 floods in Queensland & New South Wales, there was a shortage of loss adjusters & specialist hydrologists needed to determine if the resulting damage was from fluvial or pluvial floods.
This had major implications on the sub-limits and deductibles of insureds’ traditional property policies. Fluvial flood cover was subject to a separate sub-limit and deductible, where the pluvial was not. This resulted in a 6 month delay in hydrologist review before a claim determination could be made.
Descartes’ parametric flood Insurance: swift indemnification and tailored solution
Descartes’ parametric flood insurance does not have these complications as both types of floods would have been covered under the parametric insurance policy. Therefore claims settlement would be much quicker, with no questions about what was and wasn’t covered.
As flood exposures and losses are projected to increase – surpassing AU $8.8 billion in insured losses since 2019 – corporate clients can’t afford to remain uninsured. Descartes’ Parametric cover provides customized protection, with a flexible and straight-forward structure tailored to clients needs, risk appetite and budget.
case study example
Flood risk for real estate owner
A real estate owner in Queensland, Australia
Problem
A real estate owner located along the Brisbane River in Queensland, Australia, had suffered losses during the 2011 and 2022 floods. Hard market conditions and past losses left them facing significant spikes in rates, so they opted to be fully self-insured in recent years.
Solution
With awareness of their on-going exposure, the client and their broker decided to transfer their flood risk to a river gauge parametric policy tailored to their specific needs and budget.
Result
If repeated, with floodwaters surpassing the pre-defined policy threshold of 5 metres, they would receive a rapid insurance payout of A$25 million to cover repair costs and bridge the business interruption impacts on their balance sheet.
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