Damage repairs from natural disasters in Australia are likely to become more expensive a few decades from now. Zoe Fielding of Property Observer, an independent news site for property investors, discussed a recent report from the Australian Business Roundtable. This non-profit organisation for disaster preparedness says that the economic costs of floods, storms, and brushfires in the country are estimated to grow from $6 billion to $23 billion in 2050. This would prompt businesses, especially small and medium enterprises or SMEs, to step up their risk management programs:
“The claims bill for tropical cyclone Ita in Queensland in April was around $8.4 million, the Insurance Council of Australia estimates. Bushfires in Perth in January cost $15 million and bushfires in NSW in October 2013 cost $183.4 million.
The latest Australian Business Roundtable report, Building an Open Platform for Natural Disaster Resilience Decisions, argues that well-planned investment focused on risk minimisation could save between $12.7 billion and $14.6 billion a year in disaster recovery costs.”
This translates to improving their insurance portfolio, which is a rather daunting task if SMEs don’t even know what they’re at risk of. Fortunately, there are plenty of experts who can help them out, such as John Burkhardt and the rest of Insuring theProduct, a group of reputable insurance brokers from the Sunshine Coast in Queensland. One of the packages they provide is a business interruption insurance policy, which would protect SMEs from profit or revenue losses due to fires, break-ins, and utility failures. While floods aren’t normally covered by this policy since they’re the preserve of property insurance packages, they can be considered on request since flooding is quite common in Queensland.
Historically, flooding mainly occurs in the province from January to April, although heavy rainfall sometimes persists into September to December, such as what happened in 2010. SMEs in the agriculture and mining industries often suffer the worst damage, as their losses have topped out at $1.6 billion and $2.5 billion, respectively, in the past. More recently, flood warnings in Queensland were issued on March, 2014, as many areas like Brisbane, Condamine/Balonne, and the Sunshine Coast experienced heavy rainfall from the 25th to the 27th.
Of course, there are more mundane matters that a business interruption insurance policy can protect against. For example, if flooding has bogged down Queensland’s supply and distribution chain, this policy can cover SMEs for losses due to delayed deliveries. Business interruption insurance also protects them from the unforeseen costs of relocating from one place to another, which typically include bonds and legal fees. Reliable Sunshine Coast insurance brokers can tell SMEs what kinds of risks they face, since natural disasters aren’t the only thing they should worry about.
(Source: Natural disaster preventive action and risk management could save over $14 billion a year, Property Observer, July 21, 2014)