An examination of accident compensation claims during

natural hazard events

Rosi Winn, Alice Huston & Catherine Weston

• Hazards in Australia • Analysis scope & approach • Results

Agenda

“Flood claims could climb as high as $6b” SMH 25/1/11

“Victoria on heat alert” The Australian 30/1/2011

“Counting the cost of Yasi's great fury” SMH 5/2/11

“Disasters to take toll on insurance costs” ABC News 6/2/11

Todd river in flood Source: http://www.alicespringsanglicanchurch.org.au/about_alice_springs.php

Todd river regatta Source: http://www.westlakes.rotaryaust.org/images/uploads/regatta.jpg

Cooper creek punt – 2011 Source: http://www.theaustralian.com.au/news/nation/gallery-e6frg6nf-1225877106020?page=11

SouthernFloods 1990

Drought 2002-5

SouthernHeatwave

2009

Record rain WA

1999

Hail Sydney 1999

Hazards in Australia

1950 1960 1970 1980 1990 2000 2010

Floods NSW 1955

Fires WA

1961

Meckering Earthquake WA1968

Fires WA

1978

Fires TAS 1967

Floods Brisbane

1974 Cyclone

Tracy NT 1974

Drought 1982-3

Fires VIC 1983

Dust storm VIC 1983

Newcastle Earthquake NSW1989

Cyclone Larry 2006

Cyclone Yasi 2011

Floods QLD / VIC

2011

Fires ACT 2003

Dust storm NSW 2009

HeatwaveBrisbane

1994

El Niño / La Niña – rainfall patterns

El Niño La Niña

Cyclone activity in the Australian region is also linked to La Niña.

2009 – the end of the drought

Sydney dust storm – Sept 2009 Source: http://www.triplem.com.au/sydney/shows/grill-

team/photos/dust-storm?selectedImage=2

Victorian bushfires – Jan / Feb 2009 Source: http://www.theage.com.au/national/firefighters-battle-new-

outbreak-of-victorian-bushfires-20090224-8g17.html

Major heatwave in Adelaide & Melbourne – Jan 2009

• High level study covering both CTP and workers

compensation • Based on more highly populated states – NSW,

QLD, VIC • Work with Scheme data – standard data variables • General approach was a matched pairs analysis

• Claims experience reflects a multitude of factors • Approach compares experience during an event vs. that

at other “similar” times – this standardises for other factors without explicitly identifying them

Approach - general

• We considered 2 source databases

• ICA – historical and current disaster stats • AG’s Department Disasters Database

– records all natural and non-natural disasters dating from 1622 onwards

• Filter to pick events • Types of events • Locations & durations • Timing – 1/1/1981 onwards

• Separate BOM data used for heat waves

Selection of events

Selection of events

VIC NSW QLD All Bushfire 3 3 1 7

Cyclone 0 0 3 3

Earthquake 0 1 0 1

Flood 4 4 3 11

Hail 0 2 3 5

Heatwave 5 5 5 15

Storm* 5 4 3 11 All 17 19 18 53

• 6 hazards selected for analysis

• Insufficient events for: • Tsunamis • Tornado • Landslide • Earthquake * Note: 1 storm event covers 2 states

• 10 pairs selected for each event • Selection algorithm considered day of week, seasonality,

holidays, other events (“black out” periods)

• Analysis considered claim frequency & mix of characteristics

Selection of matched pairs

Different multi-year approach used for events >2 weeks

NSW CTP Frequency • Examine results by event

and across events • Wary of events which may

not be representative • Look for consistent

patterns of experience • Also consistency across

states

Sample results

0%

20%

40%

60%

80%

100%

120%

140%

7 8 9 11 13 22 12 14 28 29 32 35 36 39 40 41 42 43 31

Storm Hail Flood Bushfire Heatwave Earthquake

Ratio of event claim frequency to matched pairs

Outlier – christmas / NY period

Possibly influenced by

legislative change

Flood

• Events

• Storm – Australia wide • Hail – NSW & Queensland

(incl. 1999 Sydney hail) • Cyclone – limited to Queensland

(incl. Larry, Yasi) • Characteristics

• Frequency • Mix of claims

Storm, hail & cyclone - events

• Clearer picture for storm, similar patterns

but less evidence for hail & cyclone • Generally higher frequency, especially for

CTP - despite exposure effects? • CTP

• more low severity claims, younger people, pedestrians, multi-vehicle collisions?

• fewer cyclists, motorcyclists, • Workers

• more claims from safety workers, • slightly more females

Storm, hail & cyclone - findings

• Events

• 4 NSW, 3 QLD, 4 VIC • Major events

• Newcastle June 2007 • Melbourne January 2011

• NOT Brisbane 2011 • May not be sufficiently

representative of major events

Flood - events

• CTP

• Higher frequency • Similar claim mix effects as for

storm • Workers

• Lower frequency • More females, older workers

• Flood events tend to be local • Are these effects caused by the

flood or rain? • Needs more granular analysis

Flood - findings

Bedourie March and April 2011 Source: http://www.wrightsair.com.au/floodwaternews.htm

Rosi Winn

• Events

• 3 Vic, 3 NSW, 1 Qld. • 3 long duration

• Findings • CTP – More fatalities • Workers - Increased claims from

emergency response workers • Some other effects observed with

weak evidence – interpretation? • Events localised - NSW workers claims clustered by postcode

=> more granular analysis may be of interest

Bushfire – events & findings

Victorian bushfires 2009 Source: http://www.churcheswa.com.au/2009/02/prayer-for-

those-affected-by-the-victorian-bushfire/

Heat events • Identified events using BOM data

• EHF captures temperature anomalies, important since people acclimatise to local conditions

• Top 5 events in each city – broad coverage, although UHI effects too

• In general, people most at risk • Older people • Those with cardiovascular and

respiratory conditions • Those undertaking physical activity

• CTP – little noticeable change

• More high severity claims? • More claims from young people?

• Workers • Slightly reduced claim frequency • Increased proportion of claims for males & older workers • Increased proportion in some industries – food,

manufacturing • Suggests some link to those more at risk, but

evidence base is fairly weak

Heat events - findings

• Australia = “tectonically stable”

• 1989 Newcastle • 1968 Meckering, WA • 1954 Adelaide

• Not possible to a anticipate, except perhaps aftershocks => responses limited

• Newcastle earthquake – 28 Dec, 10.27am • Results included in paper for interest only

Earthquake

• Implications for Schemes

• Relatively benign financial impact • Indications that most people are able to modify behaviour

to reduce exposure • Implications for community safety

• Risks to pedestrians during adverse weather • Risks to event responders • Heat events – care if not able to modify activities / work

environment • For more localised events (flood, bushfire) - more work may

be needed to analyse experience at a more granular level

Overall conclusions

Questions?