Cyclone Debbie reached landfall around lunchtime on 28 March 2017, and initial forecasts suggested that it could cost the insurance industry far more than the A$3.5 billion (US$2.65 billion) attributed to Cyclone Yasi in 2011 – largely because this storm hit more populated areas such as The Whitsundays and Bowen.
The full impact will not be known for months. However, it is currently understood that extensive flooding and wind damage to crops and property, financial losses to businesses, disruption of crucial services such as power, sanitation and water, as well as stranded tourists and sadly, five deaths, have already generated over 40,000 claims – with many still to be reported.
Mr Phil Clements, a Cunningham Lindsey Adjuster, described living through Cyclone Debbie as like “cowering in the dark for 10 hours, barricaded in the bathroom, whilst 260km/h winds pick up all sorts of debris (bikes, street signs, and tree limbs) and impact your house. Later you find rainwater (or even sewage) everywhere; windows broken, septic tanks overflowed and furniture destroyed, whilst externally it looks like someone has taken to your garden with a huge chainsaw”.
Industry response began once report about a cyclone forming was known
The industry response began as soon as reports indicated that a cyclone was forming – long before it hit and the Insurance Council declared a catastrophe. Brokers were helping their clients to manage their preparations, insurers were checking their exposures and briefing claims staff, whilst loss adjusters were activating catastrophe management plans and preparing to get into the field as soon as conditions improved sufficiently.
At Cunningham Lindsey, the response was swift and efficient. Our catastrophe plan was activated on 27 March, ensuring that many adjusters were in position as things developed, with others on standby to travel from interstate or overseas if required.
A relatively new aspect of our service involved the deployment of drones to allow early surveys of affected and otherwise inaccessible areas. Significant damage was shown to have been caused to trees, boats and general infrastructure, and the recordings became compulsive viewing for our clients.
Less property damage than feared
Most importantly, there was significantly less property damage than feared, proving that local building codes are largely effective in ensuring that structures can withstand such extreme events. Much of the actual structural damage related to older properties, not subject to building codes. Whilst this is often covered by insurance, all repairs must comply with the latest standards, leading to possible delays in settlement due to concerns over cover for betterment. Given the humidity, delays are unwelcome and we are already seeing mould spores forming in many damaged properties.
Enforced office closures meant that initially, incidents relating to Airlie Beach and Bowen needed to be serviced out of Townsville. In the early days, our adjuster’s faced round trips of up to 7 hours to even reach the damage zones, however some days later, caravans were made available as shared accommodation in Bowen to ease the conditions.
Tourists not told about impending cyclone
Also, when visiting areas worst affected, such as The Whitsundays, our adjusters encountered many bewildered tourists displaying a growing anger over a perceived lack of communication from the authorities regarding the impending danger.
There are lessons to be learnt here, such as coordinating the cancellation of flights in days surrounding such an event, or providing stronger advice to potential visitors not to travel – actions which will reduce the burden on the insurance industry.
Further evidence of repercussions can be seen in the extreme flooding over a vast area. Lismore was one of the worst affected cities, with up to 400 businesses impacted and 200 buildings inundated by up to 2.5 metres of water. Despite this, we were heartened to see strong support in the community for those displaced.
For example, Mr Andrew Smith, Branch Manager at Lismore, saw two ladies visiting workers and offering sandwiches and support. “It was a simple gesture of compassion,” he reflected, “but one which caused at least one business owner to break down”.
Mr Tom O’Hara of FAS Global, also in Lismore, witnessed local residents volunteering to help strip business premises bare, because “anything that was wet had to be thrown out due to the dirty water. They were literally getting rid of everything save for the walls”.
Climate change effect
Even with communities rallying, our adjusters discovered many residents who were seriously considering relocating their families and businesses. Similarly documented in the media, there is a real fear that this could lead to the decline of regional communities and culture.
With the Climate Council recently warning that extreme storms, rainfall and flooding events will become more widespread and severe due to climate change; it is understandable that people are rethinking their circumstances.
Science tells us that a warmer atmosphere holds more moisture, leading to larger storms. Also, projections suggest the maximum one-day rainfall could increase by over 15% for both New South Wales and Queensland in the future – a less than ideal outcome in areas that cannot cope with current levels.
Adopt building codes
Given this outlook, how can the insurance industry and governments successfully manage the long term implications of storms that could regularly inflict damage on our towns and urban areas, infrastructure, and the natural world?
One mechanism is that Building Codes for cyclone affected areas are reviewed annually by the Australian Building Codes Board – taking into account findings from this event. Experience-based updates can be complemented by the latest technologies to protect properties. Given the projected increases in cyclonic activity over a wider area, neighbouring local governments might also look to pro-actively adopt these codes, and encourage retrofitting where possible, particularly into more southerly areas of Queensland.
Early indications are that the majority of property damage claims will relate to flood, as such, significant infrastructure changes could be considered in affected areas to prevent continued losses of this type.
Such efforts would need to take context into account. For example, whilst building levees and installing flood gates would not have been effective in heavily impacted areas such as Murwillumbah, Mackay or Lismore, they may have been beneficial elsewhere; in areas such as Rockhampton.
From another perspective, better planning could significantly reduce localised risks associated with flood management. Ongoing community education programmes and the provision of accessible, local resources such as sandbags to protect properties are but two forms of this.
Additionally, as seen during recent floods in the UK, the military could greatly assist residents through the delivery, and arrangement of sandbags; providing assistance in moving valuable possessions to safety; or simply managing the lock up and evacuation process.
With so much Australian infrastructure being situated in 1:100 flood zones, Professor Rob Roggema of the University of Technology Sydney believes that more environmental-awareness should be built into our urban design.
Citing examples such as Rotterdam, Hamburg and Stockholm, his ideas include the creation of larger, interconnected green spaces such as parks and wetlands outside of urban zones, which can store water. Also, redesigning public spaces and roads to allow water to either drain straight through, or act as a temporary reservoir are seen as beneficial.
Study and implement most suitable technologies
Whilst debate still rages worldwide regarding climate change and what not, if anything can be done to mitigate its effects, events such as Cyclone Debbie are tangible and their devastating effects are reflected in the claims that the insurance industry will handle in the months ahead.
Living in an increasingly global economy, it is important that we continue to study events such as these, as well as share our findings and implement the most suitable technologies available in affected areas as soon as possible. With extreme storm events set to become more frequent and severe, the actions we take today will undoubtedly influence the profitability of the insurance industry in the future. A
Mr Paul Bloxsome is a Business Development Manager at Cunningham Lindsey and with a Science Degree with majors in environmental management and human geography.