As Tropical Cyclone Alfred intensifies, authorities have called on insurance companies to ensure transparency regarding policy coverage, warning that ambiguity could leave thousands of homeowners without adequate protection.
Embargoes on new insurance policies have already been imposed, preventing last-minute coverage purchases. Concerns are mounting over how insurers handle claims and communicate with policyholders, especially given past disasters that exposed gaps in coverage expectations, according to Sky News Australia.
Insurers Face Scrutiny Over Policy Transparency
As natural disasters become more frequent, policyholders have struggled with unclear insurance terms, particularly regarding storm-related flooding. Some residents who believed they were covered for flood damage later discovered that cyclone-induced flooding was excluded from their policies.
According to Sky News Australia, global technology firm Smart Communications has urged insurers to proactively inform customers about what their policies include, ensuring they are not caught off guard post-disaster.
“It is essential that policyholders receive a clear summary of what is and isn’t covered ahead of time so that they are not caught off guard in the aftermath of a disaster,” the company stated.
Emergency Embargoes Leave Residents Without Options
The timing of Cyclone Alfred’s approach has further complicated matters, as insurers have already implemented embargoes on new policies. These restrictions, imposed when severe weather warnings are issued, prevent people from purchasing or modifying coverage once a disaster is imminent.
David Koch, executive director at Compare the Market, explained that securing last-minute coverage is often impossible.
“Once a weather warning is in place, it’s usually too late to secure or upgrade a policy,” he explained.
Even if a new policy is issued, insurers may impose no-claims periods, effectively nullifying coverage during the disaster itself.
Insurance Costs Rising Due to Extreme Weather
Beyond immediate concerns over Cyclone Alfred, the broader issue of rising insurance premiums has been a point of contention.
The Insurance Council of Australia acknowledged that inflation, global reinsurance costs, and more frequent extreme weather events have contributed to higher policy prices, making coverage less accessible for many homeowners.
“The only sustainable way to address insurance affordability is to reduce or remove risks,” an industry spokesperson stated.
This includes investing in resilience-enhancing infrastructure and reforming land use planning, but such measures require significant government collaboration and investment.
Calls for Better Communication and Digital Access
With severe weather potentially making physical documents inaccessible, experts have urged insurers to adopt better communication strategies. The Insurance Council of Australia has advised companies to send timely digital notifications and improve customer support to assist policyholders before and after disasters.
As Queensland and New South Wales prepare for Cyclone Alfred’s impact, attention will remain on how insurers handle claims, communicate policies, and support affected residents.
