Calls for Clearer Flood Information at Government 2022 Inquiry

Two years on from the devastating East Coast river flooding, the Federal Government has launched a major public and industry stakeholder consultation on the handling of flood claims, the impact on communities and better ways to be more resilient and plan for the future.

The Standing Committee on Economics inquiry into insurers’ responses to 2022 major floods claims will hear from councils across the south-east, as well as members of the public and local community legal services.

The hearings are being held through April and May at some of the regions most heavily hit by the floods, including Brisbane, Lismore, Sydney, the Hawkesbury, Eugowra, Molong, Melbourne, Rochester and Heathcote.

Specifically, they are looking at claims affecting:

South-east Queensland and northern NSW floods of February and March 2022
Hunter and greater Sydney floods of July 2022
Victorian, NSW and Tasmanian floods of October 2022, and
Central west NSW floods of November and December 2022

Daniel Mulino, the chair of the Committee, wants the hearings to take stock of the floods’ impact on communities and to listen to their accounts of how they have experienced the claims process with their insurers. Given that many of these towns have been hit once again, the Committee will be looking to see if the claims handling process has been improved. The full Terms of Reference are included here.

The Need for Better Flood Information

While much of the focus of the Committee will be on issues related to claims handling, there will also be consideration given to how information can be provided to homeowners and buyers in a clearer way, as part of future mitigation. This includes “accessibility and affordability of hydrology reports and assessments to policyholders; affordability of insurance coverage to policyholders; the impact of land use planning decisions and disaster mitigation efforts on the availability and affordability of insurance.”

In the last committee meeting on 9th April 2024, Garth Hamilton MP asked a question about when landholders purchase a property, how aware are they of the risks associated? He refers to the flood and other climate risks that the Government, insurers and other agencies may be aware of, but not the general public.

In response, Scott Waters, CEO of the City of Moreton Bay, shared some of his community’s experience, saying: “I think the real estate industry does have a responsibility, particularly when we are selling properties that may have been flood affected many, many years ago.

Time has passed and people may have forgotten or have moved from another part of the country.

I think it should go past the situation that we have now of a bit of buyer beware: ‘Do your own due diligence, and, if you purchase a property that floods, then that’s a matter for you.‘

We are seeing some situations where people are purchasing properties and two years later it is inundated and they are in a situation where they have a home that they didn’t think was part of a flood plain or flood damage area.”

He referenced that there is a need to think about the “sale process and how we work through all of the different transaction requirements that sit with conveyancing at a point in time” highlighting the need for better information on flood and other climate risks earlier in the process.

Mr Waters described it as “ a very difficult situation. It’s got to go beyond buyer beware. Right now, potentially there is something that needs to be done when houses are purchased and sold.”

The full transcript can be found here.

Concerns were also raised about insurance premiums and the unavailability of flood insurance, highlighting that to get a mortgage they need to have flood insurance, and homebuyers just can’t afford the mortgage and flood insurance.

There were also calls for greater sharing of flood maps and understanding of the type of flooding to highlight these issues was needed and recognised that building on flood plains was still happening.

More than 400 people have already provided feedback on their experience with their insurers, with the online survey remaining open until July 31, 2024. The commission will also hear from departments and agencies, among them Treasury, the National Emergency Management Agency and the Australian Competition and Consumer Commission. The committee is expected to report by 30 September 2024.

Making Flood Risk Clear for Homebuyers

We welcome the comments raised in the Committee about greater transparency and use of flood risk information in the conveyancing process. This is why in June 2023, we launched the ClimateIndex report for conveyancers and real estate lawyers to be able to clearly and effectively advise their client on the degree of flood risk affecting the transaction now, 5 years and 30 years into the future.

The ClimateIndex™ report is available now on a lot-specific basis across the whole of New South Wales and provides commentary and Guidance on flooding, as well as bushfire and coastal erosion risks. It also highlights potential insurance issues and provides clear and simple next steps advice. And now with the NSW Law Society delivering its Guidance on climate risks, it also helps you to comply with your duties to ensure that you are signposting this risk as part of your due diligence.

For more information on the ClimateIndex™ report, visit www.groundsure.com.au. The report is also available through InfoTrack and TriSearch as part of their property search portfolio.

References

Date:
Apr 30, 2024

Author:
David Kempster

Calls for Clearer Flood Information at Government 2022 Inquiry

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