V4.3 WEF 20/12/12

Page 1 of 11

Version 4.3 – 20 December 2012

INSURANCE TASKFORCE

CATASTROPHE COORDINATION ARRANGEMENTS

Mission

Provide industry level services following a declared catastrophe event that

augment the collective ability of general insurers, who are Insurance Council of

Australia members, to deliver critical support to the community and to facilitate

government disaster recovery actions.

V4.3 WEF 20/12/12

Page 2 of 11

Intent of the Arrangements – Why coordinate some issues at industry level?

Natural disasters are an ever present risk for communities living in Australia and it is the general insurance industry that forms the cornerstone of economic recovery in Australia following a disaster event.

The reader of this plan only has to look towards the examples of economic recovery and rebuilding following disasters such as Cyclone Tracy ($4BN), the Newcastle Earthquake ($2BN), the devastating 2009 Victorian Bushfires ($1BN) and the summer of 2010/11 which saw 9 separate catastrophe events totalling over $5BN in losses; to gain an appreciation of the critical role that the industry plays in assisting a community to recover.

Individual insurance companies are accustomed to meeting the claims demand placed upon them both during normal business and times of crisis. However, following especially large or sensitive disaster events, the expectations placed upon the industry by external stakeholders can be significant and occasionally will not be based upon a full comprehension of how insurance works or the nature of the contract between policyholder and insurer.

Notwithstanding the high level of professionalism that has been a hallmark of the Australian industry there is a need, when a large number of claims and issues arise during a significant disaster, for the industry to speak with one voice and to operate cohesively in the best interest of the affected community, and most importantly to ensure that industry service delivery is innovative and appropriate to the needs of the particular community.

Through the application of high level coordination and information sharing, the Industry can increase its net benefit to an affected community. Coordinated efforts from the industry will also facilitate the roles of the various Government agencies who will become involved in recovery operations. A well executed and high level partnership between the industry and Government can significantly improve the delivery of respective services to those impacted by the disaster.

It follows that during the refocusing of the Insurance Council in 2006, a central goal identified and approved by the Insurance Council Board was to build and maintain a high level coordination capability to be employed following a disaster. The strategic intent of this blueprint objective, for the industry, is to firstly increase the effectiveness of our individual efforts for insured disaster victims and secondly to improve and simplify liaison with an ever maturing State and Federal government emergency response system.

With this intent in mind the Insurance Council has developed and maintained a standing Insurance Taskforce capable of responding to issues arising during major events.

The reader should also consider that no plan can cater for every detail of a possible crisis and a great deal depends on the judgment and professionalism of member company representatives to ensure that effective coordination can be carried out.

This plan provides an excellent framework to ensure a cohesive response from the industry and I invite all members to engage in its execution (when necessary) with a sense of collaboration and support for the Australian community.

This plan outlines the following steps in the industry catastrophe process:

1. Assessing the catastrophe event

2. Communications with the Insurance Taskforce

3. Communications with the public

4. Liaison with governments

5. Site & consumer liaison

6. Escalation of issues

7. Data collection, sharing and decision support.

INSURANCE COUNCIL INTENT FOR CATASTROPHE COORDINATION

V4.3 WEF 20/12/12

Page 3 of 11

Achieving the Mission

There are 5 major tasks undertaken by the ICA through the Insurance Taskforce to achieve the mission

statement:

Problem Solving

Providing escalation services for community leaders to access relevant senior industry representatives capable of decisively responding to

claims matters raised, before minor issues are misconstrued and add to the trauma of the affected community.

Senior Industry Level Representation

Provide access to impartial senior industry representatives to be involved “from kickoff’ at relevant Federal, State and Local

Government Emergency Committees, representing the interest of insurers involved in rebuilding and repair.

Data Sharing & Decision Support

Provide key industry perspectives and data that is relevant to the catastrophe event in order to assist decision makers in understanding

the true impacts of the event and progress being made during recovery.

Public Education

Provide clear, concise and relevant messages regarding insurance and recovery issues for the community in order to prevent unnecessary

anxiety through miscommunication or lack of awareness.

Industry Level Media Management

INSURANCE TASKFORCE MISSION

Mission

Provide industry level services following a declared catastrophe event that augment the collective ability

of general insurers, who are Insurance Council of Australia members, to deliver critical support to the

community and to facilitate government disaster recovery actions.

V4.3 WEF 20/12/12

Page 4 of 11

ASSESSMENT OF A CATASTROPHE EVENT

Community Impact

Project Claims

Volume

Predicted Government

Response

Media Impacts

The higher the level of anticipated impact on the local community, the higher the level of coordinated response by the insurance industry.

The higher the level of anticipated sustained media reporting on the issue, the higher the level of coordinated response. Consider what hot insurance issues are active and if there is a potential crossover with the catastrophe event.

Projected claims cost exceeding $50 million, a resource limitation or claims volume that may impact of normal repair timelines will require a catastrophe declaration.

The activation of a government recovery taskforce or the involvement of key political stakeholders may require a declaration in order to service government needs.

Factors considered in

declaring a Catastrophe

Event

Catastrophe events and their outcomes, when they occur, can be unexpected and instant like an earthquake, or in the case of some bushfires, cyclones and floods they can arrive with some warning and time to prepare.

Regardless of the source of the catastrophe the most important issue is to make a judgment regarding the extent of the loss, the needs of the community and the public expectations that may arise with regard to the industry. This early assessment will drive actions regarding information collection, liaison with government, communications and coordination activities.

Unfortunately, there is no single formula or impact matrix that can adequately encompass the complex environment of speculation and expectation that surrounds a disaster event.

Some events can involve a significant number of claims and financial loss and yet attract little or no comment or need for coordination in what may be a highly resilient community. Other events involving a relatively small number of claims can create a disproportionate need for assistance in the community as well as media interest for a variety of reasons.

The most appropriate methodology is one that uses qualitative assessment incorporating the context of the disaster itself.

The assessment of the need to declare an event and to carry out coordination for an event will be conducted by the Insurance Council.

Board consultation will be carried out in situations where Exceptional Circumstances may exist due to the size, location and nature of the event, giving rise to subsequent relaxations on specific Code of Practice requirements for the processing of claims.

Where there has been a declaration of a catastrophe event including Exceptional Circumstances, insurers will be advised regarding the specific relaxations on timelines for claims management in Section 3 of the Industry Code of Practice.

The following factors are considered by ICA when determining if an event should be declared a catastrophe for insurance purposes.

Action

Action

Action

Following declaration of a catastrophe event, the Insurance Council will allocate a Catastrophe number, activate the Insurance Taskforce and commence coordination of issues and communications with government.

ICA to assess each natural disaster event against factors and determine if a catastrophe should be declared.

ICA to notify members of any declaration or instigation of exceptional circumstances and specific code relaxations.

ICA to notify APRA and relevant government agencies and Members of Parliament that the industry has declared a catastrophe event.

V4.3 WEF 20/12/12

Page 5 of 11

TASKFORCE COMMUNICATIONS

ACE Insurance Munich Reinsurance Insurance Australia Group

AIOI Insurance NTI Limited - NRMA Insurance

Allianz Australia Niponkoa Insurance - CGU Insurance

Ansvar Insurance RAA Insurance - Swann Insurance

AON Benfield RAC Insurance - SGIC

Assetinsure RACQ Insurance - SGIO

Auto & General RACT Insurance - RACV

AVEA Sompo Insurance Suncorp Group

Calliden Insurance Sunderland Marine - GIO

Catholic Churches Swiss Reinsurance - Suncorp

Chartis Insurance Territory Insurance - AAMI

Comminsure Tokio Marine - APIA

Employers Mutual Progressive Direct - VERO

FM Global Real Insurance - Shannons

Genworth Financial Westpac Insurance - AMP

General Reinsurance XL Group QBE Insurance

Great Lakes Australia YOUI Insurance - Elders Insurance

Guild Insurance Wesfarmers - CUNA Mutual

Onepath Insurance - Wesfarmers Insurance - QBE

Lloyds Australia - Lumley Insurance

Mitsui Sumitomo - Coles Insurance

Member Companies of the Insurance Taskforce

Effective communication within the industry following the declaration of a catastrophe event is critical.

A failure by the Insurance Council to provide effective communications to its members and aligned industry bodies may result in the delivery of conflicting messages to the community regarding the Industry response, and is to be avoided.

The Insurance Council maintains a contact list for the Insurance Taskforce that will be used to distribute email and SMS alerts (if required) following assessment of an insured event. This list is also used, where appropriate, to provide advice on disaster events that are being monitored or that are predicted but have not yet caused any damage.

For a declared catastrophe event, an initial communication will be to the Insurance Taskforce. This communication should contain;

• the assigned Catastrophe number, • details of the catastrophe event, • Details of the geographic extent of the catastrophe, • details of known damage, • details of the known government response,

Once initiated, the Insurance Taskforce becomes the hub for coordination of issues relating to the insured recovery effort. Coordination for whole of industry issues will be carried out primarily by email and by teleconference or videoconference if the matter requires discussion. Details of conferences are provided by email in advance of the event.

As a standing rule, matters concerning individual stakeholders are managed one-on-one with the stakeholder by staff of the Insurance Council assigned to manage the taskforce.

Taskforce members should also note that the ICA closely coordinates Insurance Taskforce activities with other industry bodies, communications intended for the Taskforce will often also be copied to the:

• Financial Ombudsman Service, • National Insurance Broker Association, • Australasian Institute of Chartered Loss Adjusters, • Master Builders, Master Plumbers, HIA etc

Maintaining contacts on the Insurance Taskforce is critical for Stakeholders who wish to be involved in the coordination of Catastrophe Events. Member companies should regularly review who their delegates are on the Taskforce, details can be confirmed by making contact with the Insurance Council.

Action

Action

Action

ICA to establish an insurance tasforce by issuing an alert to members calling for nominations.

ICA to notify members of all parameters for the catastrophe and determine a data collection routine for the event.

ICA to update members electronically at least daily until the majority of issues are resolved. Teleconference briefings to be reserved for significant issues only.

To supplement the operational effort being undertaken by the Insurance Taskforce, the Insurance Council also issues Controlling Officer circulars to member companies to inform respective CEO’s about any particular coordination issues.

V4.3 WEF 20/12/12

Page 6 of 11

The Insurance Council of Australia will represent the general insurance industry on catastrophe issues to the public through a combination of activities including: 1. Industry level engagement of the media 2. Providing industry information via websites and social media 3. Participation in community forums, and 4. Management of an insurance hotline for consumers.

PUBLIC COMMUNICATIONS

Media Engagement

Insurance Hotline

Community Forums

Websites & Social Media

Media Engagement The Insurance Council’s communications team is responsible for distributing information to the public via the media and providing whole-of-industry comment.

No media activities are contemplated by this plan that would prejudice individual member company statements or positions. Member companies retain the inherent right to make their own public statements as and when required.

However, a whole-of-industry position can be communicated to best effect only if it is first harmonised with any individual statements being made. Coordination with member company communications representatives is critical.

The Insurance Council will establish a communications working group of affected member companies, derived from its existing Communications Committee, to ensure that there is a continual flow of information and views on the industry comment being developed and provided.

Community Forums Community forums for insured disaster victims are atypically organised by community welfare groups, legal aid, or local MPs in the weeks following a disaster. The need for a community forum is typically triggered by perceptions of ‘insurance difficulties’ being experienced by a small number of claimants in the disaster zone.

Forums are typically conducted in a local hall or council facilities and are an important event at which the industry must be present in order to assist with delivery of the facts, education of the public and escalation of individual cases if necessary.

ICA staff will usually represent insurers at these forums, though insurers will always be invited to attend. ICA representatives will usually cover the following points:

1. The size of the event and the generic claims process, 2. How insurers are tracking on claims closures , 3. Any critical trades or supply issues, 4. Dispelling any persistent urban myths relating to claims, 5. IDR and EDR processes.

Insurance Hotline The ICA operates a post-disaster 24hr Toll-Free hotline for consumers.

The purpose of the hotline is to provide a visible escalation process for consumers and community leaders who perceive an insurance issue, in general or with a specific claim.

Matters raised through the insurance hotline are usually escalated to the attention of the relevant member.

See page 9 for issues escalation.

Action

Action

Action

ICA to open Consumer Hotline at commencement of declared event and escalate significant issues to relevant members.

ICA to manage industry level media issues in concert with communications teams from relevant members.

ICA to facilitate industry presence at community forums in order to deliver key messages to impacted community.

ICA CONSUMER

CATASTROPHE

HOTLINE

ICA

MEDIA

CONTACT

1800 734 621 02 9253 5161

An initial press release will be sourced from Insurance Council media templates. The press release will be written to provide information to those affected by the disaster. It will contain general information about the disaster, such as where it occurred, at what time, details about contacting your insurer, and where to get more information. Subsequent releases may address specific issues raised with the Insurance Council by governments or other interested parties.

V4.3 WEF 20/12/12

Page 7 of 11

A central pillar of the industry’s strategy for providing a ‘whole of industry’ interface following a catastrophe, is establishing high level and impartial liaison between the general insurance industry and any standing State & Federal emergency committee’s as well as any specific government taskforce established for a defined event. The Insurance Council’s, Risk & Disaster Planning Directorate, has established membership of each state’s standing emergency & recovery committee (or named equivalent). Industry membership of specific taskforce’s established in the wake of a particularly significant catastrophe will be managed by the Insurance Council following an event on behalf of the industry. Government taskforces established for post-disaster recovery will often require the establishment of a specific government/industry working group, ICA will ensure that ICA members have an opportunity to participate in that government working group themselves and/or be represented by the ICA. Liaison with government is also implemented directly with relevant Members of Parliament at State and Federal Levels, to ensure that MP’s have access to the most accurate information regarding the events and can access the industry’s escalation process (through the insurance taskforce) if they feel the need.

LIAISON WITH GOVERNMENT

Recovery & Repair Timeline Expectation

Trades & Supply Availability Impacts on Recovery

Synchronizing Insurance Messages with Government Communications

Insurer Participation in One-Stop-Shops and recovery centres.

Temporary Accommodation Issues

Relief Funding Arrangements for Insureds

Cleanup, Contamination and Disposal Policies

Data Availability and Reporting Needs

Claims Escalation Protocols

COMMON ISSUES FOR IMMEDIATE RESOLUTION WITH GOVERNMENT

Action

Action

Action

ICA to maintain presence on standing state based government emergency committee’s on behalf of the industry.

ICA to represent industry as required on relevant post-disaster government working groups, ensuring that industry issues are addressed.

ICA to liaise with impacted state and federal members of parliament following an event, to ensure relevant facts are available and escalation paths understood.

V4.3 WEF 20/12/12

Page 8 of 11

Senior Industry Representative Some incidents will be significant enough in terms of impact to the local community to warrant the deployment of a senior Insurance Council representative to the catastrophe site.

Within the first 24 hours a decision will be made by the Insurance Council on the requirement for an industry representative “on‐the‐ground” in the disaster area, typically to be located at any relief or recovery centre established by government agencies.

The role of the industry representative will be to: 1. Identify and report any issue which may impact upon the general insurance industry,

individual insurers or recovery efforts for policyholders.

2. Liaise with Ombudsman, Broker and Loss Adjuster industry representatives on behalf of the industry as required.

3. Provide onsite impartial insurance guidance to local recovery services and any established government taskforce.

4. If required, provide community briefings on Insurance processes and action being taken by the industry.

5. Represent the CEO of the Insurance Council as the local representative for the industry for the purpose of media briefings and/or approved commentary.

6. Represent the Industry to locally based or visiting Sate and Federal MPs and staff.

7. Seek resolution of detected problems and issues involving insurance claims (specific and general) by liaison between the member company and any taskforce established, before the problem escalates to a formal dispute.

Insurance Captains In some events, where there are multiple government run relief centres and an urgent community need exists, the most efficient way for the industry to project an industry level presence locally will be through the appointment of an ‘Insurance Captain’. Insurance Captains are member company staff who have been volunteered by their parent company, through the Insurance Taskforce, to fulfil the role. The Insurance Captain is the first point of contact with customers at a relief centre who have an insurance issue. They will:

1. Direct consumers to their insurer representative (if they are onsite, at which point no further action need be taken by the captain), or

2. Undertake to escalate the consumers issue through to the ICA Consumer Hotline 1800 734 621.

3. Conduct an onsite meeting at least once a day with other insurers to ensure proper coordination of any site issues and the execution of this process.

4. Make contact with the lead government agency present for each site, at least daily and at handover times. The government agencies present in the relief centre should know at all times, who the designated insurance captain is and that consumers can be directed to them.

IC A staff will provide a briefing on roles and responsibilities to all volunteer insurance captains prior to deployment, including instructions on relevant OH&S issues present in the disaster zone.

SITE & CONSUMER LIAISON

Action

Action

Action

ICA to deploy as required a suitably experienced senior industry representative to the disaster zone to liaise with government and consumers.

ICA to call for Insurance Captain volunteers as required, where ICA site resources are unavailable.

ICA to conduct a daily briefing with volunteer Insurance Captains, to ensure duties are understood and OH&S matters are addressed.

In extreme circumstances, where Insurance Council resources will not suffice, additional member company representatives may be appointed as Insurance Captains to represent the industry at relief centres.

V4.3 WEF 20/12/12

Page 9 of 11

Escalation of consumer issues Catastrophes are by definition traumatic events for all stakeholders. During these events it is not uncommon for some members of the community to become confused or to require additional support. Whilst insurers provide direct support to policyholders under the terms of their policy and once a claim has been lodged, there are occasions where members of the community, or community leaders, will wish to escalate an issue of concern. The ICA provides an escalation service for the community to seek answers to common questions or to raise particular concerns about a specific issue. All significant matters raised through this service are escalated to relevant members for their action (determined by them at the time). The ICA escalation process is depicted in the following diagram:

ESCALATION OF ISSUES

Action

Action

ICA to escalate issues to relevant members as required.

ICA to call for Insurance Captain volunteers as required, where ICA site resources are unavailable.

ICA to conduct a daily briefing with volunteer Insurance

Information received by ICA from a variety of sources

Information packaged

and sent to relevant Insurer

Information is logged on the ICA Escalation Database Nominated representatives on the Insurance Taskforce will

receive an electronic escalation record from ICA defining the issue and handing the matter to them for action as they see fit.

V4.3 WEF 20/12/12

Page 10 of 11

The aggregate size of the insured loss for an event is often the only true reflection of the cost of a disaster event to the community. Unfortunately, media and other stakeholders can unintentionally misrepresent disaster issues if facts are not available. This leads to confusion and misdirection of resources for all stakeholders. Data collected by the Insurance Council following an insured event is used by the media for reporting purposes as well by government agencies to make critical and time sensitive decisions regarding the provision of support to an affected community. The essential information requirements likely to be placed on Industry are captured by the following questions: • What is the extent of the insured loss following the event? • What has been claimed in respective classes, what has been reserved and

what has been paid in cash? • What is the extent of underinsurance for this particular catastrophe event

and community? • What is the extent of non‐insurance for this particular community? • Are there any particular classes of insurance experiencing higher than

anticipated claims? • Are there any claims trends appearing that indicate a particular need in the

community not identified by government? • Progress of ‘make safe’ works and rebuilding on a monthly basis until close

of the incident.

The industry also has a formal arrangement for the reporting of catastrophe specific data to APRA in order to assist with APRA’s regulatory responsibility’s. All insurers have been approached by APRA to provide catastrophe data through the ICA at agreed intervals. The Insurance Council will initiate formal data collection by issuing a tailored data collection template to all members. • Category A are properties rendered entirely unusable by the event and requiring

major repair or reconstruction before reoccupation can occur, and • Category B are properties that can continue to be used after emergency repairs

(make safe) but will require significant repairs that will impact upon occupancy whilst being carried out.

Every catastrophe is different and the specific needs for data will be shaped by the event and the perceptions of the government agencies and media that the Catastrophe Arrangements are servicing. Specific data required may be varied significantly at the start of the event to suit the circumstances.

DATA SHARING AND DECISION SUPPORT

Action

Action

Action

ICA to issue a dedicated claims collection template for declared events.

ICA to nominate collection dates for data, to ensure that government and community remain informed balanced with industry demands.

ICA to coordinate data reporting to APRA and development of communications material to demonstrate progress on claims and key issues.

Following development of reliable data, the focus will shift to frequent updating of data sets in order to demonstrate industry progress and contributions to the recovery effort as well as to pinpoint any issues in the insured community. The most common data requirements are for claims volume by class, reserving by class, cash/emergency payments by class and details specific to Category A and B properties, where;

Example of periodic graphical reporting provided to government to demonstrate progression on claims

V4.3 WEF 20/12/12

Page 11 of 11

Intentionally Blank