JOSH FRYDENBERG:
Good afternoon. I’m pleased to be joined by Rob Whelan who is the CEO of the Insurance Council of Australia. We’ve just had a meeting with senior representatives of the insurance industry, including the CEOs of Allianz, ING, Suncorp, QBE, Zurich, among others. Also present at the meeting were the Secretary of Treasury as well as representatives of APRA and ASIC.
We received an update from the Insurance Council and the CEOs about their progress to date in responding to the bushfires and what they expect to encounter over the coming weeks and months as we get support to those people who need it most. We discussed how we can work together going forward to prioritise those claims, not only that have already been put in but also those that will be submitted into the future.
There is around 8,500 insurance claims, totalling around $700 million in losses that have already been made. Around 20 per cent of those claims have already been assessed, bearing in mind that the fires have been going for some months now. And of those 20 per cent of claims that have been assessed, around half of those have already been settled. There are claims, of course, for home and contents, claims for commercial properties that have been damaged or destroyed as well as primary producers and, of course, vehicles as well have been damaged in these fires.
The insurance industry has taken a number of steps already to get support to those who need it. They have been providing emergency accommodation to their customers who have been affected, they have been providing some cash support because when you lose everything what you do need is some cash to go out and buy the basics that we take for granted. They have increased their staffing levels, including bringing in assessors from overseas and they will continue to take steps to ensure that they have the adequate number of people who are there to process these claims and to assess the damage. These insurance companies are providing a 24/7 service for those who have been affected.
Importantly, the insurance companies have already lined up builders to start the rebuild process. What is very pleasing and I underlined this point to the insurance companies today, to prioritise the use of local tradespeople in the communities that have been impacted because these communities need to rebuild and the more jobs that can be provided locally the better. The companies gave that guarantee that they will do that.
In terms of moving forward, what we discussed is how we can provide, working with the states and the recovery agency, support for the access of the insurance companies and the assessors and recovery specialists in to the fire affected areas where it is safe to do so. We also discussed the removal of debris. When properties are being destroyed and some of those properties may have asbestos or other particular materials, it’s important that we have a coordinated approach to the removal of debris. That is something that has been the responsibilities of the states and we will be working with the states and the Insurance Council to see if we get a coordinated approach a bit like that that had occurred after Black Saturday in Victoria which the Insurance Council said was very successful and should be a model for going forward.
We also talked about the provision by the insurance companies of more data at a granular level to the Government about what is happening postcode by postcode, because the more data that we get from the insurance companies, the better we are able to prevent bottlenecks and be able to deal with capacity constraints that may be occurring within particular communities. So if from one community there is a rapid rebuild and another it has been slower to rebuild then the recovery agency and the Government want to know that so that we can get the support into those communities.
The other thing that we discussed today is that there are always unscrupulous individuals and companies that seek to profit out of other people’s misery and ASIC made the point that where there are unregistered builders or unlicensed companies that are seeking to mediate between the insurance companies and individuals and they’re unlicensed to do so, then ASIC will step in and step in strongly. Obviously, that can be quite problematic for getting a rapid resolution of some of the claims. So we discussed that.
It was a very constructive meeting. We recognise that the insurance companies are a major part of the rebuild process and the Federal Government, the Morrison Government, will be working with the state governments and Andrew Colvin and his recovery agency to ensure that all the necessary possible support was given to those communities that need it most.
ROB WHELAN:
Thank you Treasurer, well the insurance industry had a very productive and cooperative meeting this morning with the Treasurer. It gave us the chance to demonstrate to the Treasurer and to the Governor General just how seriously the insurance industry is taking this particular task. This is an enormously complex issue. It is a very large event that we’re having to cope with. It stretches the entire south east border of Queensland right through to Victoria on the east coast. And we have been deploying resources since September to be able to manage this event.
So we were able to give the Treasurer reassurance that we take this extremely seriously, that we will throw all necessary resources at this particular event to make sure our customers are properly serviced, that their communities and lifestyles are rebuilt as quickly as possible. And as the Treasurer has said, we’ve put major resources into being able to provide quick assessments, quick claims processing, having people on the ground that people can talk to work through their claims and make sure that they’re feeling comfortable with the insurance industry is there to assist them and put their lives back together again. And that’s the principle objective of our industry is to make sure we can make sure our customers are rebuilt and return to their lives as quickly as possible.
JOURNALIST:
In relation to the 8,000 claims, are you able to give us a breakdown of the states and also what has the average claim been in dollar amount?
JOSH FRYDENBERG:
I’ll let Rob talk to the detail but obviously they vary in terms of amounts and they vary in terms of time. As you would expect a motor vehicle claim is quite different to a home and contents claim which is quite different to somebody’s farm which has been burnt and livestock have been lost. So there is a whole range of claims here and what the insurance council emphasised was the complexity of some of these challenges. Now some of these claims can be dealt with, as they said cash payouts will be in seven to fourteen days. Others may take a little bit longer than that. But Rob?
ROB WHELAN:
They do vary enormously because you have complex commercial claims as well as home and contents claims and motor vehicle claims. But on average it’s probably around $50 thousand for a contents claim and $300 thousand roughly for a home claim where there’s a total loss. And those are very much rough averages. It does vary quite a bit. So it is early days for us out there because we’re progressively getting access now to areas. People are able to give us feedback about what their claim looks like, we’re able to get assessors out there, into those areas and get a better understanding of the size of the claim and the complexity around that claim. As the Treasurer said, importantly clean-up is a major issue, coordinating with government at all levels to make sure we can get the clean-up done quickly so that we can commence the rebuild process is fundamental for us. So getting coordination across all levels of government in a complex environment is a critical issue for the insurance companies to be able to get out there, do their job and do it quickly.
JOURNALIST:
We’ve seen this before, how does this particular disaster compare in terms of size? And are you confident that the insurance companies have learned from previous mistakes and I suppose the length of time it has taken to get claims that people in this crisis will have their claims dealt with quickly?
ROB WHELAN:
Yes. It definitely will be dealt with as quickly as we possibly can. Yes we have learned over the past decade or so given the number of catastrophes we have experienced in Australia. We have learnt a lot from each catastrophe and how to do things better and better. That’s what we always try to do is to learn from each one and so that’s why we’ve developed these processes including having builders ready on hand to go in and start the rebuild quickly, being able to access assessors from around the world if necessary, to be able to get the people on the ground quickly to do the assessments, having 24/7 call lines for clients to be able to lodge their claims, etcetera. And those sorts of things just expedite the whole process now, that we can get action out into the field as quickly as possible. So yes indeed we have learnt a great deal.
JOURNALIST:
Treasurer you spoke about red tape this morning, that maybe the government can help with the claims and payments aspect of [inaudible]. Can you just speak to a bit of detail around this? Is there anything the Government can do to fast track some of the removal of that red tape? And Mr Whelan, on a policy sense is there anything the Government can be doing for this disaster but also future disasters to tackle structures under insurance and these sorts of things?
JOSH FRYDENBERG:
Well in terms of ASIC, they made a point about these unscrupulous people who may be seeking to profit out of this situation and they will come down strongly on them. In terms of APRA, they made the point that they believe the insurance industry is in a strong position to respond and indeed the insurance companies have said from a financial position this is very much a manageable response. In terms of the excess that people may have had on the insurance policy, by invoking hardship circumstances which is of course of significant relief to some those people who have insurance claims but do not have the money to meet the excess side of those payments. But Rob?
ROB WHELAN:
Yeah, there are a number of provisions the insurance companies are implementing now to make sure the process of getting your claims settled is as fast and as painless as possible. We want to make sure that people are treated with dignity and compassion when submitting a claim. These are traumatic times for the individuals, they have virtually lost everything in their lives and in some cases actual lives have been lost as well. So we’re fully aware of the sensitivities around this and we want to make the claims process as easy as possible for them to be able to get their lives rebuilt and their businesses back on an effective basis again. So, that’s what the insurance companies are prioritising as we speak. And hardship is a critical issue. We understand people have different circumstances and we don’t want to impose a blanket approach to people. We will treat each individual on a case-by-case basis. That’s what the companies are all doing; they’re treating everything on a case-by-case basis so they’re case managing people to make sure the individual is treated as such; an individual.
JOURNALIST:
Treasurer…
JOSH FRYDENBERG:
Yes.
JOURNALIST:
Do you have a view on calls for a Royal Commission into the fire?
JOSH FRYDENBERG:
Well the Prime Minister’s foreshadowed that there will be a significant enquiry. He’s also said very clearly that this is something he will discuss with the State Premiers as you would expect him to do. I mean this disaster has been national. We’ve seen fires in New South Wales, fires in Victoria, fires in Queensland, Western Australia, South Australia, Tasmania. There’s been right across the county so there will be an appropriate time for the Prime Minister to have those discussions with the State Premiers because clearly there will be lessons to be learnt and there will need to be a proper enquiry to gather that information. But at the same time, you know, it won’t be long before the New Year is upon us too and so we need to endure that those lessons are learnt quickly and that the changes, if as required, are put in place.
JOURNALIST:
Does Craig Kelly represent the views of the Morrison Government?
JOSH FRYDENBERG:
In what respect?
JOURNALIST:
In the respect of climate change?
JOSH FRYDENBERG:
Well our view…
JOURNALIST:
…and their connection to the fires.
JOSH FRYDENBERG:
Well our view on climate change is that it’s real. We accept the science and we’re part of an international solution to deal with an international problem. We set ourselves the goal of…
JOURNALIST:
…he doesn’t though…
JOSH FRYDENBERG:
…The Government’s position is very clear, we set ourselves the goal of a 26 to 28 per cent reduction on 2005 emission levels by 2030. We will meet and beat that target as we have done with previous targets. Australia is about 12.9 per cent, its emissions are about 12.9 per cent below 2005 levels, while New Zealand have seen their emissions go up, China have seen their emissions go up, India have seen their emissions go up. Australia’s emissions are coming down. When it comes to the transition, we’re absolutely focused on getting renewable energy into the grid but also stabilising the grid and that’s what we’ve seen.
JOURNALIST:
But the Prime Minister has over the last couple of days made very clear that he believes that the link and the connection between climate change, a warming globe and these bushfires. Craig Kelly was on UK TV this morning and denied that link, why was he allowed to do that?
JOSH FRYDENBERG:
Well, man-made emissions are contributing to climate change. It’s very clear. The evidence is clear, the science is clear. Climate change is real, man is contributing to climate change, emissions are contributing to climate change; we are seeing hotter, dryer summers in Australia. There are lots of factors that are played into these recent fires including the build-up of fuel, including the extensive drought. But there’s no doubt, there is a hotter, dryer climate and climate change is occurring and we are part of an international solution to deal with an international problem. And our target is 26 to 28 per cent by 2030 are significant and we’ve taken a number of steps to ensure that we meet and beat those targets.
JOURNALIST:
Well it was recently pointed that Craig Kelly made the comments that he did in that interview and does this erode Australia’s reputation internationally when it comes to tackling global warming?
JOSH FRYDENBERG:
Well if you look at our record of meeting and beating our targets, that’s what matters to the international community. That countries are doing that and what I can say is that Australia’s emissions have been going down, where other countries’ emissions have been going up. One in five Australian homes have solar panels on their roofs, around 25 per cent of our energy is now coming from renewable sources. We’ve got Snowy 2.0, we’ve got the Battery of the Nation in Tasmania, a second interconnector planned between Tasmania and the mainland. We have seen double the level of renewable investment in Australia compared to the United Kingdom, to France and to Germany. We have a very strong story to tell about the transition that is occurring across our economy. But it must be done in the most cost effective way. The position of the Government is abundantly clear, climate change is real, we accept the science and we are taking steps to meet and beat on 2030 target as we have met and beaten our earlier targets.
JOURNALIST:
On the fires with the banks, small businesses are very worried that they may not have been directly affected by the fires but they don’t have staff working there, they’ve had to shut down…
JOSH FRYDENBERG:
Yes.
JOURNALIST:
…what kind of assistance is available to small businesses and will you be telling the banks to give them some flexibility in terms of loan repayments even extensions?
JOSH FRYDENBERG:
Well, there are already existing payments and allowances that allow small businesses to receive that support during this time of hardship and the $2 billion that we announced yesterday, the National Bushfire Recovery Fund an additional and an initial $2 billion commitment from the Federal Government, will see money for the support of small businesses for our farmers and our primary producers. Just as we did with the north Queensland floods where we saw up to $75,000 grants being provided to help some of these primary producers restock and replant. That is critical to the rebuilding and to the recovery process. I’ve spoken to a number of the CEOs of our leading banks and made it very clear, that they have tasked their organisation to ensure that support is being given to those affected by the bushfires. Now this may mean the waving of fees and charges, this may mean cash advances to deal with some of the cash flow shortages, this may mean the deferral of interest and principle repayments on their loans. This is what we have spoken to the banks about, this is the steps that the banks themselves have taken because like the insurance companies, they recognise that their clients, their customers, their communities have been dramatically affected by these tragic fires.
JOURNALIST:
Would you consider mandating that if the banks don’t cooperate?
JOSH FRYDENBERG:
Well to date, the banks have been taking steps to ensure the support for those communities. They have also been making, I have to say, generous donations to the bushfire appeals and that’s really important because corporate Australia, and we saw today and I congratulate the steps that the BCA have taken with its membership to get out and to support these communities in need who are all in this together, corporate Australia, Federal Governments, the state governments, local governments, not-for-profit organisations, everyone is pitching in to do their part.
JOURNALIST:
Just on climate change though, how can people take what you say seriously when you have Craig Kelly contrasting what you just said and even the Deputy Prime Minister saying that people drawing these connections are raving lunatics?
JOSH FRYDENBERG:
Because I am the Deputy Leader and Treasurer of Australia, the Prime Minister is the Prime Minister of Australia and Michael McCormack also as a senior member of this Government is part of our emissions reduction task in ensuring that we meet our international commitments. So our focus, in on delivering on those international commitments, doing Australia’s part as part of a global solution, and as I outlined, we have met and beaten our earlier targets, we are seeing a rapid transition in our energy sector to more renewables. What we need to do is do that in the most cost-effective way as a nation and the public would expect no less.
JOURNALIST:
He was referred to as a senior politician, how is this allowed to happen?
JOSH FRYDENBERG:
Well Craig is a member of the Backbench.
JOURNALIST:
Mr Whelan, is the government, do you think, taking the appropriate steps on climate change given there’s more natural disasters happening in Australia?
ROB WHELAN:
Look I think they are in the sense that these things are very complicated and transitioning from a high emission to a low emission economy is not a simple thing so governments need to take that into account. The insurance industry is in the business of risk assessment and we certainly take climate change into account when assessing our risk profiles in this country as other companies do around the world. So climate change is real, we factor it into things and I think Government is fully aware of the issues and is working towards it. From our point of view, adaptation is the key, we need to start adapting quickly in this country to the new circumstances that we’re experiencing, we have had many catastrophes, extreme weather events and these will continue to come and all the science says these will continue to come in more frequent and for more intense storms etcetera.
JOURNALIST:
Treasurer, the local economies have been devastated by the fires. We’ve just heard there are builders on hand, is there any guarantee that that work will be undertaken as much as possible by local tradies, local businesses? Is the Government able to do anything about that?
JOSH FRYDENBERG:
Well in terms of today’s meeting we absolutely underlined the importance of the insurance companies, where it’s possible to do so, to use the local trades people and that is their intention, they also made that very clear. When the Federal Government working with the state governments is generating the rebuilds to property that has been lost, our focus again will be on local communities, local tradespeople, ensuring that what is built is resilient for the future, that is what our focus is. So we recognise the importance of job creation after such catastrophic and tragic fires.
JOURNALIST:
Some people that ABC has been speaking to on the fire grounds has raised the idea of being able to access the income protection insurance but a lot of people have it through their super schemes and there’s circumstances in which they can access it which are very narrow. I’m not sure if it’s a question for you but should the circumstances be expanded that people in major disasters like this can take the money they have been storing away?
JOSH FRYDENBERG:
The super industry, no doubt like the banking industry, like the insurance industry, will be having a look into the circumstances and having a look at how people are affected, because you’re absolutely right, income protection is important to people and they may have not lost their home but may have lost their livelihoods effectively because the businesses that they’re running are not have the customers come as they otherwise would have, so these are circumstances that no doubt the superannuation industry is looking at.
JOURNALIST:
Mr Whelan does the industry expect that premiums to go up in fire affected areas?
ROB WHELAN:
Look, we do have to take into account the changing risk profiles that are occurring in this country. So we risk rate every individual property now so it’s not done on a global basis it’s done property-by-property so the key again to having a sustainable ability to contain and or reduce premiums is to mitigate the risk. By reducing the risk you reduce the overall expense of being able to insure a property or an asset, and that’s something that we are constantly talking about is that that’s the most sustainable way of actually reducing the cost of insurance, is to start mitigating against the risks that we know are there and we know we have to deal with and that can be done on flood, fire and a range of other perils. So these are the sorts of things we are looking to be able to contain, the cost of insurance for all Australians, by encouraging them at an individual level and at a community level to undertake appropriate mitigation to reduce their risks and if we can do that then the insurance industry will respond with reduced premiums.
JOSH FRYDENBERG:
That’s where we’ll finish but I’ll just say that as the Prime Minister has flagged, mitigation, adaptation, looking at the zoning laws, looking at where places are being built, looking at fuel stores, they’re all the issues that no doubt will be part of a formal inquiry process after the events so that the lessons are learnt that mitigation, adaptation and will be a key part for meeting some of the challenges we face in the future.
Thanks very much.