One in four NSW and QLD residents not insured for extreme weather

New data suggests 22 per cent of New South Wales and Queensland residents are uninsured against extreme weather events such as floods, bushfires, or storms.

With many NSW and Queensland residents currently facing significant flooding and property damage, the 1000-person survey by Savvy found many people underestimated the risk of being impacted by severe weather events.

Of those surveyed, 21.3 per cent said they had been impacted by severe weather events and had made a claim, with storm damage (124 respondents) and flooding (93 respondents) making up the largest proportion of claims.

For those 787 respondents yet to make an insurance claim, 177 said flooding had affected their home, while 150 had been impacted by damaging winds and 55 by bushfires.

Despite concerns around severe weather events, only 54 per cent said that they had taken out home and contents insurance; 8 per cent only for their homes, and 15.5 per cent only for contents.

Almost two thirds (61 per cent) of respondents said that they are concerned ongoing weather events would make home insurance unaffordable with 32.8 per cent of respondents saying their premiums have increased by up to 10 per cent.

One of the key reasons for under-insurance is the difference between people’s perception of the risks and what real-world data suggests, Savvy noted.

According to an Insurance Australia Group (IAG) report on natural perils, Queenslanders are at high risk of cyclones, however, 22.7 per cent of total respondents believed they were at no or low risk.

Approximately, 22.2 per cent of Brisbane and Sydney residents said they had no exposure to bushfires, while a further 23.4 per cent agreed that their property had a low bushfire risk, with the IAG report showing medium risk for both Sydney and Brisbane.

In terms of flooding, 44.1 per cent reported low risk, while IAG showed a high to medium risk for NSW (metro and regional) and a similar risk for Brisbane and regional Queensland.

Savvy CEO Bill Tsouvalas said many people are currently under-insured due to the incorrect perception of risk.

“There is a definite gap between what’s been recorded by experts and captured by real world data relative to the perceptions of those risks among the general population,” Mr Tsouvalas said.

“The gap between reality and perception may mean people will under-insure rather than seek out adequate coverage, which could devastate families caught in extreme weather events who lose everything.”

According to the ICA, in the period up to 10 March, there had already been a total of 118,016 insurance claims worth $1.77 billion lodged across flood-affected regions of Queensland and NSW.

Queensland has been the hardest hit so far from an insurance perspective with $1.107 billion in claims compared to $663 million in NSW.

Currently, 81 per cent of claims have been for property damage with 16 per cent related to motor vehicles.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.