The insurance industry responds to Victorian Earthquake

As at 4pm today, industry has received approximately 2,600 claims from yesterday’s earthquakes in Victoria. Approximately 97% of claims are from Victoria, with the remainder from NSW. Claims are almost entirely for domestic property. The majority of claims appear to be for minor damage to plasterboard, render and contents. There are reports of a handful of claims that appear to be for more significant structural damage, however these will need to be assessed to confirm the extent of damage.

At this stage, the ICA is not contemplating a catastrophe declaration. That said, ICA will be providing industry coordination for the event via the Catastrophe Operations Working Group and GSR Committee. Summaries of activities will be provided to the Catastrophe Taskforce.

Last night, ICA received confirmation from the Victorian Government that critical repairs and assessments are not subject to the current construction sector restrictions. This means assessors, loss adjuster, builders and trades can also travel from metro areas to rural areas to conduct essential work/critical repairs, despite the movement restrictions on construction workers. My email from last night is attached for your reference.

Stakeholder Engagement

ICA is continuing to liaise with Emergency Management Victoria and Bushfire Recovery Victoria to understand the extent of damage from this event. ICA will maintain daily contact with both agencies to gain a better understanding of any emerging issues. ICA has also met with ICNZ to discuss their knowledge and experience with earthquake recoveries and potential contentious issues that may arise.

The ICA will also be meeting with the Victorian Department of Treasury and Finance next week to discuss the earthquake and the insurance claims process. The Victorian Government has informed ICA that it expects insurers to act quickly and appropriately with any claims.

Media update

The ICA has provided media interviews to the following:

• TV: Ch7 News, Ch9 News, ABC News (syndicated nationally), ABC The Business
• Radio: ABC Melbourne Drive, ABC Canberra, 2GB News
• Print: Australian Financial Review, The Australian, Insurance Business, Insurance News.

The key talking points are:

• [1700] claims, with no estimated $ value at this early stage [numbers are updated twice daily].
• The majority of the damage is for home building claims for minor damage e.g fallen cornice, damage to plaster and render.
• [96]% of claims are from VIC, [4]% from the ACT & NSW [numbers updated daily].
• Insurers have received a handful of significant structural claims
• Insurance assessors are considered authorised workers and are permitted to conduct damage assessments under the current COVID-19 restrictions. Builders and trades are also permitted to conduct urgent and essential repairs including property make safes.
• Earthquakes are a prescribed event for home building insurance pursuant to the Insurance Contracts Regulations 2017. This means that earthquake damage is considered ‘standard cover’ included in a home building policy. The only exception is if the insurer clearly informs the homeowner in writing – and before the policy is entered into – that earthquake cover is excluded (Insurance Contracts Act). [an example being how certain budget direct policies are marketed as excluding flood cover]
• Contact your insurer to discuss your property if you think it may have sustained earthquake related damage.

Industry data collection

The ICA will be requesting enhanced claims data from members for this event. The reason for this will be to create a de-branded aggregate that will assist Government’s understanding of the size and extent of damage. The data will also provide industry with useful claims insights given the sparsity of sizeable earthquakes in Australia. A template for this data collection will be distributed next week with relevant postcodes and dates.