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Effect of Cyclone Larry
On 20 March 2006 the North Queensland region around Innisfail and
Babinda was devastated by a category 5 cyclone: Tropical Cyclone Larry.
Wind speeds of up to 290 km/h cut a swathe over 150 km wide causing
extensive damage to residential, industrial and agricultural property in an
area half the size of Tasmania. Initial estimates were that, in the worst
affected areas, up to 99% of homes, 50% of private businesses, and 25% of
government buildings sustained significant damage. Electricity supply and
road and rail access to the region were also severely disrupted.23
In the first few months after the event, overall losses were estimated by
the Insurance Council 24 to be approximately $600 million. By
1 November 2006 insurers had received 25,796 domestic claims with an
estimated cost of $321 million.25
As at 31 July 2006 the Insurance Council reported that almost half of the
home building claims have been settled. The insurance industry has been
working closely with the Cyclone Larry Operation Recovery Taskforce to
help rebuild the homes and lives of those affected as quickly as possible.
Insurers have been meeting regularly with the Queensland Government's
Building Coordination Centre, based in Innisfail, to identify and resolve
issues such as waterproofing all homes before the next wet season and
prioritising, where possible, those homes in need of re-roofing.26
Extent of damage from Cyclone Larry
Houses built in mid 1960s to mid 1980s that had not been renovated
suffered the highest percentage of roof damage of all housing types. The
majority of houses in this category predated the revision of the Queensland
Building By-Laws that incorporated many of the lessons from Cyclone
Tracy (Darwin 1974). A substantial proportion of older houses that had
been refurbished, including some structural improvements, fared much
better.27
Increase in costs after mass disasters
Mass disasters can cause huge and unpredictable increases in rebuilding
costs:
- After Cyclone Tracy in Darwin in 1974, building costs increased by
75%.
- After the Newcastle earthquake in 1989, costs increased by 35%.28
- After the ACT bushfires in 2003, building costs increased by 50%
between November 2002 and January 2003.29
Preliminary reports following Cyclone Larry would indicate that there
was a significant increase in local building costs after the disaster.
Insurers surveyed estimated that building costs increased by at least 50%
immediately after the disaster. Initial estimates by the Insurance Council
are that as many as 50% of houses in the affected area were underinsured
to some extent, although it is difficult to ascertain until all claims are paid
out and work completed. 30
Increases in local building costs after the disaster are likely as a result of
a number of factors including:
- the remote nature of the location and the breadth of the damage path,
- limited availability of builders and initial difficulties in accessing
sites, particularly due to ongoing rains, and
- the fact that many of the homes were older structures and were not
compliant with new cyclone building codes.
Cyclone Larry occurred in a regional area where communications and
access were restricted in the worst affected areas. The long period of rain
following the cyclone also contributed to the damage.
Local builders were quickly booked up for the next two years. The cost
of enticing builders from interstate and accommodating them locally also
added to the cost of rebuilding. The widespread damage contributed to
the lack of accommodation for tradespeople, with one insurer
commenting that even caravans had been flattened.
Three insurers surveyed indicated that costs of compliance with the
Cyclone building codes may have added an estimated $15,000-$25,000
to rebuilding costs although it will only be possible to fully ascertain
these costs when building work is completed.
23 http://www·loc-gov-focus·aus.net/editions/2006/september/larry·shtml-Australia's
National Local Government Newspaper online- September 2006 edition.
24 The Insurance Council of Australia Annual Review 'Highlights 2005/2006', May
2006, p. 14.
25 Information provided by the Insurance Council of Australia on 1 November 2006.
26 http://www·ica·com·au/corpaffairs/mediareleases.nsf/c94e71bde9284239ca2569f2000f
8b99/dff8329280d43672ca2571bc00810e5f.
27 Tropical Cyclone Larry CTS technical report TR51, September 2006, p. 40.
28 2005 report, p. 14.
29 2005 report, p. 51.
30 Information provided by the Insurance Council of Australia, 1 November 2006.
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