Insurance offer reveals flood risk

A move by a major insurance company to offer flood cover automatically with its home insurance has revealed that the Peninsula may now be considered an area at high risk of flooding, following climate change studies.

NRMA Insurance stated: "Ninety-eight per cent of our customers will receive flood cover automatically with a minimal increase."

However, local residents have reported premium increases of 50 per cent in areas of the Peninsula which do not normally flood.

Major insurance company NRMA said it had taken information from a range of sources to work out where flooding was likely, including flood mapping from local councils, State Government terrain data, independent flood experts as well as the industry flood database.

It is understood that this includes mapping undertaken by the council in preparation of its policy on sea level rise due to climate change.

NRMA stated: "For the two per cent of customers who live in higher risk areas, their premiums will reflect the increased likelihood and severity of flood in these areas.

"Customers in high risk areas have choice.

"If they don't want to pay for the extra cover then we will give them the ability to remove flood insurance to reduce their premium and still have exactly the same cover they do today.

"We have used a rigorous assessment process, but accept that it may not be 100 per cent perfect in all instances, so customers charged a flood premium can challenge us and we will work with them on reviewing their premium.

"We are trying to make this process easy for customers and what they need to do will vary depending on their circumstances."

According to the Insurance Council of Australia, a National Flood Information Database has been developed and used by insurers to determine the flood risk of individual properties based on flood maps given to them by local councils and state governments across the country.

The information is used by insurers as one of many factors to inform premium calculations.

The national database contains 11.3 million property addresses, overlayed with the known flood risk according to local government and government agency flood mapping.

The vast majority of properties in Australia have little or no flood risk, according to information contained on the insurance council's website.

"Around 2.8 per cent of properties have moderate to extreme risks of flooding," the website stated."

A spokesperson for the Insurance Council of Australia said the database was continually being updated with historical data from local and state governments since it first began in 2006.

"The purpose of the NFID is to provide to members of the Insurance Council flood mapping data that is used by insurers for underwriting flood insurance products," the spokesperson said.

"It has made flood insurance products available to consumers who didn't have access to this product previously.

"The National Flood Information Database is being frequently updated as flood mapping is released or existing flood mapping is improved by governments.

"The database was first released in November 2008 and since June 2009 has been progressively updated three times."

It is expected that with the release of new and updated information to the database, house insurance policy holders will start to see cost changes in their premiums as policies are due for renewal over the coming months.

[The editor of Peninsula News is employed by a locally-owned insurance agency, which offers home insurance among its products.]

Media statement, 4 Feb 2010 Sarah Wise, NRMA Media statement, 5 Feb 2010 Sandra Van Dijk, Insurance Council of Australia Website, 5 Feb 2010 Insurance Council of Australia