Five Years after the Queensland Floods - What has changed?

Five years have passed since the 2010-11 Queensland floods that led to 33 deaths, more than 80,000 insurance claims and $2.4 billion in insured damage. The floods impacted an estimated 78 per cent of the state and, for most, the recovery effort lasted two years. For some the impacts will never be forgotten.

Could these floods be repeated? What has changed since 2011 to help limit the loss and damage that can come from large floods in Queensland?

The answer to the first question is that catastrophic flooding will reoccur in Queensland. It is inevitable given the extent of the state's flood plains and the tropical climate. The answer to the second question is that much has been done to help lower the anticipated damage from floods, but considerable work remains in order to reach a point where the residual risk to the community is acceptable.

Governments, communities and insurers now have a much better understanding of flood exposure. In 2010 the insurance industry had access to detailed flood mapping for only three Queensland communities from an estimated 287 exposed to flooding. Flood maps weren't available or didn't exist for most Queensland towns and cities, even those with a documented history of flood damage. Many residents of flood-prone locations had no understanding of the extent of the flood risk they faced.

In 2012 the Queensland Government undertook an unprecedented flood mapping program to address this failing. The Insurance Council of Australia's subsequent data-sharing Memorandum of Understanding with the government has led to flood mapping now being available to underwriters for 272 of the state's 287 flood-prone locations.

From an address level perspective, in 2010 the industry's National Flood Information Database (NFID) listed more than 895,000 Queensland addresses (35.6 per cent) where a potential flood risk existed but where no flood data was available to quantify the risk. At the end of 2015 this has been reduced to only 209,000 individual addresses (7.6 per cent). The Queensland Government's flood mapping program has assisted the insurance industry to fine-tune flood insurance pricing for more than a million addresses in the state since 2010. Most have been allocated zero flood risk based on accurate localised geospatial data. However, data remains unavailable from some local government areas. Closing these gaps in 2016 will help local residents to insure themselves. For more information on how the insurance industry uses flood data see www.icadataglobe.com

More flood mitigation is also proving successful. Councils, with the the assistance of state and federal governments, have started to reduce persistent flood risks to vulnerable communities by constructing permanent flood mitigation. Building flood defences takes careful planning, time, political and social commitment and serious funding. However, the end result is a safer community that will be protected from catastrophic flooding for generations and, as a byproduct, many individuals will pay significantly less for flood insurance. Completed mitigation projects in St George, Roma, Charleville and Chinchilla all demonstrate that where a Council works to protect a community, premiums can fall sharply. For example, premiums fell by up to 75 per cent for some Roma residents at the end of the first phase of the town's mitigation works program. Mitigation is sorely needed in many other towns, but it is clear the insurance industry will quickly reduce premiums to reflect a lowering of the risk when work is completed and new data is presented to the industry.

Finally, much more flood insurance is available. Before 2006 flood insurance was not available for residential risks in Australia, a problem acknowledged by the insurance industry and actively addressed as part of a industry-level project from 2007. The aim of the project was to create an environment in which insurers would be encouraged to voluntarily introduce flood cover to their portfolios. Prior to 2011 this project saw the development of a standard definition for flood (unfortunately rejected by the ACCC in 2008) and the development of NFID to help underwriters set prices at an individual address level.

At the time of the Queensland floods, cover was available and included in 54 per cent of residential building policies in Australia, compared with less than 1 per cent only 36 months earlier. As a result of the devastating floods, flood mapping started to become more available in Queensland and the Federal Government enshrined a standard definition for flood, developed in concert with the insurance industry, in legislation. At the end of 2015, flood cover was a feature of 93.6 per cent of policies purchased, helping to protect many more Queenslanders.

Whilst there is much more to be done in order to address flood risk in Australia, if the past five years of activity in Queensland can be replicated nationwide and maintained for a decade, it will be possible to address the worst exposures faced by the community.

Industry stakeholders should be proud to have participated in an industry-led process that has quietly applied itself to playing its role in helping deal with this preventable community risk. Insurers need to continually encourage the deployment of flood mitigation in high-risk locations through price signals and lobbying, and to quickly adjust prices when flood mitigation successfully reduces the risk.