Massive premiums increases are making coverage cost prohibitive for many owners in high risk areas.
Following massive flooding in Queensland, Australia, many businesses are starting to drop their flood insurance and even their property coverage at a rate that is faster than the rest of the country.
This, according to a national survey that studied the rates of dropped coverage.
The plummeting flood insurance and property coverage levels have been blamed on the challenges faced in certain sectors of the economy, in combination with the rapidly rising premiums following a growing disaster trend. Yet another factor that is contributing in this area is the introduction of flooding coverage that is more expensive.
This has raised a considerable issue regarding the affordability of flood insurance coverage.
In areas with a higher risk of flooding, even homeowners are feeling a tight pinch from flood insurance premiums increases. This is because their cover can come with a price tag as high as $20,000 per year.
The survey that provided the data for the report was performed by Roy Morgan. It included the participation of 13,485 businesses. What it discovered was that in Queensland, only 35 percent of companies had property insurance. This was a drop of 6 percent since 2011.
Across the country, nearly 38 percent of businesses maintain this coverage. Since 2011, the nationwide percentage fell by 3 percent, said the report. This shows that Queensland businesses are dropping their property and flood insurance at a considerably faster rate than the rest of the country.
According to the report, “With the cost of business insurance becoming quite prohibitive in some areas, it is not surprising that fewer businesses can afford to be covered, hence slowing the recovery process … when a natural disaster strikes.”
Dallas Booth, the chief executive of the National Insurance Brokers Association, explained that the disasters that have been striking the north Australia over the last few years have caused premiums for flood insurance and other forms of coverage to rise. He also pointed out that some industries are facing economical struggles and this is making it far more difficult for them to be able to afford their premiums.