Flood risk data which could cut insurance premiums significantly is not being passed on to insurers by Wollongong City Council, it has emerged.
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For several years the council had used a faulty policy for mapping flood-prone areas, resulting in some neighbourhoods which had never flooded being categorised as “high risk”.
Following campaigns by residents and investigations by the Mercury, the council was forced to review its policy and develop a more credible method to assess who was most at risk of flooding.
This has in turn meant catchment areas’ flood studies needed to be reviewed and new mapping data developed.
But the council’s practice has been to not pass on the latest local information to the Insurance Council of Australia unless a “considerable fee” was paid, a senior ICA manager said – leaving residents vulnerable to paying inflated premiums based on outdated assumptions or data.
The ICA said the insurance industry did not pay for flood data, and if it did this would mean more costs would be passed on to customers.
The council’s practice of requiring payment was described by Ward 1 Councillor Greg Petty as “not fair and not transparent”.
“It’s unconscionable that council is trying to profit from the flood studies,” he said. “The potential exists that people have lower flood levels that what they’ve been assessed on.
“There is more updated information [and] I’m being asked why council is refusing to have it over.
“It’s costing ratepayers money – and people are going without insurance when potentially the cover may be available.”
He will take the issue to Monday’s council meeting with a motion calling for WCC to provide the latest flood studies to insurers.
“There’s updated information – what does council have to lose?” Cr Petty said.
WCC declined to comment on the issue before Monday’s meeting.
The situation is detailed in a letter from a senior manager at the Insurance Council of Australia to Cr Petty.
“The data currently relied upon by industry varies in age with one of the older datasets carrying a vintage of 1991,” the manager wrote.
“I am advised that in 2013 WCC offered access to updated flood data, for a fee. A very considerable fee.
“Insurers are quite willing to adopt new data produced by a council and to adjust premiums accordingly, to reflect a council's best understanding of the risks.
“However the industry does not pay for the flood data it uses as these costs would need to be passed on to the same policyholders that funded the studies in the first place with council.”