Make a practical flood plan now

The devastating floods to hit Queensland, Australia underline the need for well-rehearsed, practical flood plans, according to flood risk experts FM Global. 

Paul May, operations engineering manager at the commercial and industrial property insurer, urges risk managers across the Asia-Pacific region to develop a practical plan in the event of a catastrophic flood, on top of taking out the right insurance coverage.

May says companies in high-risk areas should review their practices in light of the significant event: “Identifying the flood is the most important thing, how long do you have to prepare? Some floods can hit within hours, and others give you more time. Most major loss is preventable. Our strongest clients think about what practical steps they would take if they didn’t have insurance. Yes, insurance is a backstop and a risk transfer, but a huge amount of work can be done to protect a business.”

“It is about developing a plan, how long do you have? What is the water depth? Where should I focus my attention? Most shop owners have limited resources and have to focus on the biggest bang for their buck. It could be simple, removing high-value equipment from lower levels of a warehouse, calling clients, and having flood barriers in roller doorways, for example.”

“Our advice is to understand your exposure. How can you mitigate that exposure? If I had a three storey building with a basement and had my computers in the basement, you’d move your equipment to a higher level. That is the sort of practical, pragmatic approach we would look for,” May says.

May believes testing and repetition are essential: “Once documented, a flood plan should be reviewed annually, depending on the complexity of your business you may want to do a simulated drill. You want to make sure you know where your barriers are, and how many people you need, by going through an exercise.”

The northern Queensland floods, centred around Townsville, have resulted in insurance claims of more than $175 million, according to the Insurance Council of Australia. More than 14,600 claims have been made so far, with the final number expected to rise. At least two people have died during the floods, and local reports estimate 300,000 cattle have been killed during the event.

Some companies in the Queensland region have faced difficulties claiming on their insurance policies, according to local reports. Business owners in the southern suburbs of Queensville have told politicians they may not get help from their insurer. The Insurance Council of Australia is set to visit the area to talk with residents.

The Insurance Council of Australia is working with local councils to combat the future threat. Campbell Fuller, General Manager of the ICA, said Townsville council has provided the association with flood data. Fuller said: “Once analysed, the ICA will add it to the National Flood Information Database. This will enable insurers to improve their understanding of the city’s flood risk and fine-tune their premiums for most policyholders.”

The floods have been described as a “once in a hundred-year event”, yet May believes customers need to treat major floods as a more imminent danger. He says: “The average lifespan of a commercial building is about 40 years. That would give it a 33% chance of being in a so-called one in a hundred-year event. It is not as rare as you think.”

For businesses concerned about their possible flood exposure, May suggests consulting up-to-date flood maps from publicly available sources. “It is a constant struggle to stay on top of where flood waters are going to flow. There are council flood maps available, and we have our own map available for free online.”

May says Australian flood mapping is excellent by global standards but warns companies in other jurisdictions they may not be as lucky.

He says many Asian companies operate without sufficient flood information, leaving them in danger if a catastrophe strikes: “In Australia, while we bemoan that flood maps aren’t 100% perfect, they are the envy of other countries. I have done some presentations in Asia, where local council flood maps aren’t available. The first step as a property owner is to find out your exposure. If you don’t have access to a flood map, you are completely in the dark. That is one of the reasons why we have produced our global map.”