The recent heavy rains in south east Queensland and northern New South Wales have once again highlighted the need for brokers and their clients to seriously consider the need for flood cover.

As part of an Australia-wide training program, I was on the Gold Coast on Wednesday, 19 May 2009 and in Brisbane the following day. During my entire trip there was heavy and incessant rain.
I experienced extremely heavy traffic as 85 roads were closed on the Thursday. Normally small creeks had burst their banks and torrents of water were flowing everywhere.
Thousands of businesses of all sizes, across all sectors, were clearly suffering damage and significant disruption due to the storms. I certainly felt for those affected.
While not as severe, it reminded me of the 1974 Brisbane floods, which was one of the first disasters I worked on very early in my professional career.
Over the past decade we have all seen periods of extended dry spells followed by short but very heavy rain which creates localised flooding. Northern New South Wales is having its second once-in-100-years storm this year!
The problem is that since the 1974 floods, many low-lying areas of Brisbane, Caboolture, the Sunshine and Gold Coasts have been built upon. This has created a double whammy effect. There is less natural earth to absorb the rain, and the roofs of factories, shopping centres and homes catch the water and direct it into the storm water system. This of course is not unique to south east Queensland.
Natural water courses are concreted to form channels, but these are often not designed to carry the same volume of water as the original creek. Councils often fail to maintain the channels by clearing rubbish and other debris that is dumped or otherwise finds its way into the watercourse, and hence, the problem is exacerbated. This issue is making the news in these latest Brisbane floods.

Zurich Insurance Australia is to be congratulated for offering flood cover to the full limit of liability on the vast majority of its business packs and ISR policies since September 2008. The benefit to the insuring public that this initiative has created was demonstrated perfectly in the recent Coff’s Harbour storms.
I was speaking to a broker in Newcastle at a break in one of the training sessions last week, and he explained he had offered two adjoining businesses the Zurich Business Pack policy with flood cover. One took the advice while the other chose to save less than $500 and insure elsewhere.
After the storms in Coffs Harbour on 31 March 2009, the Insured covered by Zurich have had both their material damage and business interruption claims settled. The other was advised 6 weeks after the loss that their claim had been denied.
However, a word of warning! One other insurer that purported to provide flood cover in Coffs Harbour imposed a 20% sub-limit on flood claims. This insurer has accepted all claims arising from the storm but limited the payouts to 20% of the sum insured, claiming the losses were due to flood. A purported benefit was used to limit the cover. This is not the case with Zurich who usually provide flood to the full limit of liability.
Whether you believe in climate change or not, the fact is, 30% of claims paid in Australia are weather-related. I would urge all brokers to ensure they explain to their clients the benefits of the added protection that full flood cover affords.