Many victims of last month's floods in Australia had no insurance whatsoever, and the assessment of damage was agonisingly slow.
Secondary perils, such as flood, are a global trend in the insurance industry, characterized by localized, sudden and intense weather events.
Climate change has resulted in Australia being increasingly vulnerable to extreme weather conditions. This in turn exposes the country to financial risk and we need therefore seriously think about how to manage the financial risk of a secondary peril.
Weather index insurance is a new form of insurance that uses automatic payments to make it easier for both victims and insurers. It has been deployed in remote parts as Paraguay and Mongolia — and could work here too.
After an event, insurance companies assess damage and how the money will be distributed. This often requires victims to accurately record everything they experienced so they can make a claim. The sheer number of people who experience these events can lead to long wait times while they wait to receive their funds.
But weather index insurance, sometimes just called weather insurance, is paid when an index is reached. For example, if a certain flood level has been passed or if rainfall reaches a low point.
Insurance against fluctuating weather conditions has been trialled by farmers in remote parts of developing countries to insure crops, although it is yet to be tried on property insurance.
It's hard for insurance assessors to make the long trip out to the steppes of Mongolia or floodplains of Bangladesh to assess damages from extreme weather, but advances in remote sensing and satellite technology can help determine whether or not extreme weather has occurred.
The payouts for Weather Index Insurance are automatic and fast. When a weather event is recorded, farmers receive their money even if the crop remains unharmed. This gives the farmer an incentive to make the best decisions when it comes to ensuring that his crops survive with little damage.
Weather insurance is a kind of crop insurance that helps farmers in remote areas. The weather index is linked to specific crops and their growing conditions. This way, the weather company can predict the level of losses.
Weather index insurance has shown promise in global trials and been found viable by Australian researchers. While it is not yet widely adopted, a number of farmers have recently taken up the option.
Australian insurance providers like CelsiusPro, for example, has worked with the World Bank and other aid organisations to bring weather policies to communities in the Pacific.
Published:Wednesday, 18th May 2022
|Undisclosed debt agreement results in rejected insurance claim|
25 May 2022: .financialservicesonline.com.au
A motorist lost her insurance claim dispute after failing to disclose a debt agreement while renewing her insurance policy. - read more
|Australian home insurance in crisis?|
19 May 2022: .financialservicesonline.com.au
Warmer temperatures linked to climate change are likely to make home insurance unaffordable for over 500,000 homeowners in Australia by 2030, according to a report from the Climate Council. - read more
|AFCA finds MLC failed to give proper notice of rate increases|
19 May 2022: .financialservicesonline.com.au
A dispute ruling against MLC, the Australian Financial Complaints Authority (AFCA) found that the company did not give adequate notice when it raised the critical illness premiums of a policyholder. - read more
|Insurance that pays out as soon as extreme weather hits sounds appealing|
18 May 2022: .financialservicesonline.com.au
Australians could soon see a new type of insurance that would pay out as soon as extreme weather hits. - read more
|Husband loses insurance dispute over wife's death|
17 May 2022: .financialservicesonline.com.au
A man whose wife’s life insurance policy was revoked after a superannuation death benefit clause change has lost his dispute. - read more
|5 ways to control your business insurance costs|
When it comes to your business insurance, there are a few key things you can do to drive your costs down and ensure you're getting great value.rnTake control of your insurance - it's your business, after all. - read more
|How Much Life Insurance Do I Need?|
There are many different reasons to purchase life insurance (generation skipping tax, estate plan, estate preservation, surviving spouse needs, planning for your children's future and more). There is no right amount of life insurance, but here are some guidelines that might help you decide how much life insurance you need. - read more
|Business Interruption Insurance - Getting the Indemnity Period Right|
Business Interruption Insurance can be what stands between the collapse or survival of your business following major loss such as a fire, flood or storm. As important as getting the sum insured right is ensuring that you have the right indemnity period for your business. This article will help you understand the factors which should influence how long a Business Interruption Insurance indemnity period your business needs. - read more
|Public Liability, Product Liability and Professional Indemnity Insurance|
Business liability insurance provides protection for your business against the cost of litigation and claims resulting from third party damages or bodily injuries caused due to negligence of your business. In this article we examine the three main types of business liability insurances and how they may apply to your business. - read more
|DIY Review Checklist for your Income Protection Insurance|
If you have an income protection insurance plan already - or are thinking about buying one, then you need to be aware that these policies require regular maintenance and careful scrutiny to ensure that they adequately meet your needs. Unfortunately, many people purchase income protection insurance policies only to find out about their shortcomings at claim time. - read more