Disaster Insurance Inquiry Twilight Forum

Natural Disaster Insurance Review

Keynote – John Trowbridge, Chairman of the Review Panel

Tuesday 12 July 2011
ACFS Twilight Forum – 4-7pm
Standard &  Poor’s, Level 45, 120 Collins street, Melbourne

The Natural Disaster Insurance Review has released its Issues paper and ACFS is pleased to announce that Review Panel Chairman – Mr John Trowbridge (ASIC) has agreed to address an ACFS discussion forum.  Other forum speakers include: Prof John Freebairn (Melb Uni), Nicholas Hossack, (Australian Bankers’ Association), Prof Bob Officer (Acorn Capital) and Mike Vine (Standard & Poor’s).  The event and panel discussions will be hosted and moderated by Prof Kevin Davis (ACFS).

A key reason for the inquiry is the non-insurance of many, and the predicament of many more insured householders who found that they did not in fact have cover against flood and inundation.

“The Review Panel identified two alternative future models of flood insurance: that flood cover be provided automatically as part of home insurance, … or that flood cover be provided automatically but that homeowners be able to ’opt out’ and have home insurance that includes cover for other causes of damage but not flood. The other main possibility is to retain the status quo whereby insurers remain free to offer full, partial or nil flood cover for home insurance and homeowners are free to decide whether or not to include flood cover in their home insurance policies.”

“Under the first model, Automatic Flood Cover, all disputes about whether water damage is caused by flood or storm would be eliminated. Some homeowners would face significant increases in insurance premiums … unless these homeowners were given some form of assistance to enable them to continue to insure their homes. Such an arrangement would (also) benefit … the broader community…. Under the second model, Automatic Flood Cover with Opt Out, the take-up of flood insurance would undoubtedly be greater than under the status quo but would still remain limited. Disputes over whether water damage arose from flood or storm could also still occur ….”

The Review panel has proposed innovative pooling mechanism for subsidies to be paid by either tax payers, insurers or local councils to part fund premiums on high risk properties.

While the insurance industry is generally well-versed in the issues, ACFS is conducting this discussion to draw out additional perspectives. In particular, the Review Panel seeks feedback on:

• An Automatic Flood cover with or without Opt-out
• An innovative pooling mechanism for subsidies to part fund premia
• To what extent should the level of non and under-insurance for household contents of concern to the community or to governments?
• What level of responsibility do lending institutions have toward their home mortgage customers and small businesses for cost, quantum coverage, and continuity of insurance during the life of the loan?

Participants in the ACFS discussion will:

1. Better understand the complexities of disaster insurance and the debate around compulsory cover
2. Appreciate the issues of adverse selection and moral hazard with flood insurance
3. Participate in a practical public policy discussion and contribute to an independent submission by ACFS.

REGISTER NOW

Submissions on the Issues paper are due by 14 July 2011.

Who should attend:

• Insurance Company Executives
• Policy Makers
• Regulators
• Providers of Social Services
• Finance Academics
• Home Lenders
• Insurance brokers

Program and Registration fee per person:

Download Program and Registration

Closing date: Thursday 7 July 2011  

Contact: Frieda McLoughlin events@australiancentre.com.au

T: +61 3 9666 1007
F: +61 3 9666 1099

About ACFS: The Australian Centre for Financial Studies (ACFS) facilitates industry-relevant and rigorous research and consulting, thought leadership and independent commentary. Drawing on expertise from academia, industry and government, the Centre promotes excellence in financial services. The Centre specialises in leading edge finance and investment research, aiming to boost the global credentials of Australia’s finance industry, bridge the gap between research and industry, and support Melbourne as an international centre for finance practice, research and education. www.australiancentre.com.au