Event: Queensland floods, 2010-11
Location: Brisbane, Australia
Economic cost: Property and infrastructure damage amounted to more than $10.2bn, in addition to economic losses of $30.5bn. Insured losses were $2.55bn. The floods, combined with the effects of Cyclone Yasi, shaved some $4.1bn off Queensland’s GDP for 2010-11.
Description: Heavy rains in December 2010 following a drought sparked a series of floods throughout Queensland. The Brisbane River inundated thousands of properties throughout the state, including in Brisbane. Around 200,000 people were affected, 16 died and more than 70 towns were evacuated. The flooding was accompanied by three cyclones, with the Category 5 Yasi the most severe.
Impact: Coal, construction, rural exports and tourism in Queensland suffered most, with employment, private spending, wages and prices also affected. Up to 50 of the state's 57 coal mines were inundated, prompting many to declare force majeure. Even when they were back up and running, damage to essential infrastructure meant coal could not be transported to the ports for global distribution, resulting in a spike in the global price of coal and steel. The floods damaged around 30,000 properties, and the storms and flooding damaged more than 6,700 kilometres of state roads and 4,700 kilometres of rail network.
Insight: More than 58,400 claims were lodged, about half of them arising in Brisbane. Around 26,800 of the claims concerned residential property. Insurance coverage for many of those affected by the floods was inadequate. Around half of properties in Queensland had no cover, while others had policies covering only storm and flash floods, rather than riverine flooding. The government is building levees and in extreme cases relocating properties to sites outside flood zones. Elsewhere, developers are being encouraged to reduce the vulnerability of properties by moving electrical sockets higher up walls, moving back-up services offsite, moving basement generators onto higher floors and avoiding using materials such as carpets that are susceptible to water damage. As with the Thai floods that occurred later in 2011, the event also drew attention to the impact a flood event can have on global supply chains.
Insurance solutions: The Lloyd's market offers cover in relation to Flood. Examples of this include but are not limited to: Commercial and residential property insurance, property catastrophe re/insurance, ILS products (eg. collateralised reinsurance and catastrophe bonds), flood insurance (with detailed wording that includes riverine flooding, in addition to storm surge and flash floods), home and contents, business interruption and contingent business interruption.
Image: The junction between Edmonstone and Melbourne streets in Brisbane’s West End on 13 January 2011, when floodwaters from the Brisbane River peaked at 4.46 metres.
Sources: Brookings Institution; R.C. van den Honert and J. McAneney: “The 2011 Brisbane Floods: Causes, Impacts and Implication”, Water, 3 (2011), 1149-73; Insurance Council of Australia; Queensland Treasury