As we approach the summer months, the risk of bushfires, floods, and severe storms looms large across Australia. It’s no wonder Australia’s summer months are known as ‘catastrophe season.’ This time of year, from October to April, is notorious for its extreme weather, and disaster readiness is more critical than ever. Knightcorp Insurance Brokers strongly advocate for proactive measures to protect personal and commercial assets, ensuring clients are prepared for any summer challenges.

Understanding the Risks

Australia experiences the majority of its extreme weather events during the summer months. According to the Insurance Council of Australia (ICA), since 2013, a remarkable 78% of declared insurance catastrophes have occurred between October and April, accounting for 90% of related financial losses. The ICA has emphasised the urgent need for readiness as the country faces increased risks from bushfires, floods, and other extreme weather events. 

The Bureau of Meteorology (BoM) has warned of a heightened risk of severe cyclone activity this summer due to warmer-than-normal sea temperatures. The country is potentially facing one of the hottest summers on record, with parts of Victoria and South Australia facing significant bushfire danger due to below-average winter rainfall. Meanwhile, the east coast is more vulnerable to flash floods and storms​.

These warnings compound a report from the Australian Climate Council that predicted that by 2030 a quarter of residential and commercial buildings would be essentially uninsurable, largely due to flooding. 

Steps to Disaster Preparedness

As a leading Australian insurance brokerage, we believe disaster preparedness should be a top priority for businesses of every kind. Here are a few vital steps to help protect your business as we enter the summer season:

1. Conduct a Comprehensive Insurance Review: Review your policies to ensure they cover all potential risks, including property damage, business interruption, and damage to plants, equipment, and vehicles. Consider specialised coverage for floods, bushfires, storms, and machinery breakdowns, which could be caused by power outages or damage from storms​. The ICA advises businesses to beware of any exclusions or restrictions related to extreme weather events. Remember that insurers sometimes place temporary embargoes on new policies or coverage extensions once a weather event becomes imminent​.

2. Develop a Business Continuity Plan (BCP): A robust BCP ensures your business can maintain operations during and after a disaster. This plan should outline procedures for securing critical business functions, vital records and data, and relocating operations if necessary. Consider alternative suppliers, remote work options, and communication protocols to keep staff and clients informed during disruptions​. 

3. Run a Property Risk Assessment: Regularly inspect your commercial premises to identify vulnerabilities to extreme weather. This includes checking the structural integrity of buildings, particularly roofs and windows, which are susceptible to storm damage. If your business is in a flood-prone area, ensure that proper drainage systems are in place, and consider flood barriers to protect critical areas like IT rooms or machinery​.

4. Secure Equipment and Inventory: Equipment, from computers to heavy machinery, must be protected. Critical machinery, vehicles, and inventory should be secured in safe areas. This may include elevating equipment to avoid water damage from floods or storing valuable assets off-site in a lower-risk location. Companies should also back up digital assets and sensitive information on cloud systems or external hard drives to protect against data loss due to power outages or physical damage​.

5. Create an Employee Safety and Communication Plan: Employee safety should be a top priority. Develop an evacuation plan that outlines the safest exit routes, assembly points, and procedures for accounting for all employees. Businesses should also establish a communication tree to ensure that all staff are promptly informed of any disaster. Advise employees where to find updates from emergency services and local authorities during extreme weather events​.

The Growing Challenge

Extreme weather events in Australia are becoming more frequent and severe due to climate change. The 2019-2020 Black Summer bushfires and the devastating 2022 floods in northern New South Wales and southeast Queensland are sobering reminders of the destruction these events can cause. Insurers have paid over $16.8 billion since the Black Summer bushfires, with $7.28 billion in claims from 2022 alone.

At Knightcorp, we are committed to helping clients prepare for the challenges of climate-related disasters. By proactively managing risks, you can safeguard business assets and ensure you have the protection you need to weather the storm—literally and figuratively.

As summer approaches, don’t wait for disaster to strike before taking action. Review your coverage, prepare your property, and ensure you are ready for whatever the season may bring. For more information or to review your insurance policies, contact us today. We're here to help you stay prepared.

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DISCLAIMER: This information is provided to assist you in understanding the risks, implications, and common considerations for your industry.  It does not constitute advice and is not complete. Please contact Knightcorp Insurance Brokers for further information.