QBE’s opening statement to the parliamentary flood inquiry

QBE executives appeared before the parliamentary inquiry into insurers' responses to the 2022 major floods claim.

Thank you Chair and good morning to you and the Committee. My name is Sue Houghton, and I am the Chief Executive Officer of QBE Australia Pacific, which is a division of the QBE Group. I am joined today by Mr Jon Fox, our Chief Claims Officer and Mr Andrew Ziolkowski, our Chief Underwriting Officer.

We appreciate the opportunity to participate in this hearing today.

QBE is an international insurer and reinsurer with a presence in 27 countries. We are predominantly a commercial insurer with three divisions - International, North America and Australia Pacific.

While I am the CEO of our Australia Pacific division, I have the opportunity to hear from my colleagues who lead divisions across multiple jurisdictions, which also gives me some perspective of the Australian model in the global context.

Insurance plays an incredibly important role in society and the economy around the world, which is why we must maintain a sustainable industry.

I’ve seen first-hand the devastation that was caused by the 2022 floods. Already this year, many people in Australia are experiencing destruction and losses from cyclones, storms and bushfires across our nation. Insurance will be a critical factor in their recovery.

I know we don’t always get it right and I am grateful for the feedback our customers have shared with us on the floods in 2022. We are listening and we are taking actions to address where we can improve. I am genuinely sorry for those of our customers who received poor experiences.

As you have heard, the floods occurred at a point in time when the external economic environment was particularly complex. This compounded recovery challenges in ways we hadn’t anticipated, as Australia emerged from the Covid-19 pandemic. In 2022, we were facing heightened geopolitical tensions, global inflationary pressures, significant market volatility and supply chain challenges.

The scale and complexity of these floods was also unprecedented. The geographical breadth of the events, and their persistence, was remarkable. This meant insurers faced six-times the claims volume of the average catastrophe. And given the environment I just touched on, this significantly added to the strain on our ability to respond. In this context, I would also like to recognise the immense efforts of our claims and complaints teams who work to support our customers, and do genuinely care.

At QBE, we have already implemented a range of improvements focusing on communication, resourcing and enhancing oversight of our suppliers. We are enhancing our systems and digitisation capabilities through a modernisation program. We are using technologies to improve our data and streamline our customers experience where we can.
We have learnt a lot which is helping us help our customers more effectively right now.

We also know we need to be better prepared both as QBE and an industry for the escalating impacts of natural peril events in Australia.

In Australia, we are fundamentally connected and dependent on the global economy and as an insurance industry, on the global capital and reinsurance markets. They are essential to provide support and diversification of risk for the industry and also diversification for the natural peril risk exposure of the country.

When insurance and reinsurance losses increase in Australia, and operating costs for insurers escalate, affordability and availability of insurance is increasingly strained. The gap between insured and uninsured losses is widening globally, and where this protection gap widens, individuals and communities will look to governments to provide support.

Effective actions aimed at futureproofing our vulnerable communities and the national economy are a priority, now more than ever. For many years, QBE and the insurance industry have been advocating for measures that reduce natural peril risk and increase mitigation and community resilience for our people and our built environment. This is critical to alleviate insurance affordability and accessibility.

Investing in public mitigation infrastructure, creating more resilient homes, making changes to land-use planning and strengthening building codes - so we build homes and infrastructure that are fit for the future – these are measures that will deliver benefits. QBE strongly supports the ICA’s policy recommendations in this respect and we appreciate the Australian governments focus on these matters. QBE is also very supportive of and pleased to be a participant in the Hazard Insurance Partnership that has been established by the Federal Government.

We also appreciate these solutions are complex and it will take time for benefits to be seen. Without these investments and commitments however, people will continue to suffer extreme losses from natural catastrophes and the protection gap is likely to widen.

We stand ready to work with governments of all levels, the industry, our customers, and community stakeholders, to face into these issues and develop shared solutions.

Thank you again Chair for the opportunity to be here today.