It has been another shocking season for Aussie businesses impacted by natural disasters.

The latest figures from the Insurance Council of Australia put this summer’s total insured damages bill for bushfires alone at almost $300 million.

Three weeks later we began trading again and our customers immediately returned, which was great but if we didn’t have insurance we wouldn’t be here today.

Ben Menkins

With six weeks still to go, this figure – which doesn’t include uninsured businesses – is virtually guaranteed to rise.

Wizened small business owners, who have borne Mother Nature’s wrath and returned to trading, know first-hand just how easily a natural disaster can destroy the unprepared trader.

Floods

Bronwyn Reid gets understandably jumpy when dark clouds roll in.

The Queensland business owner has endured flooding of her home town Emerald not once but twice in eight years.

The first flood, in 2008, did not impact her business. However, the second, in December 2010, saw water pour into her environmental business, 4T Consultants, and start rising up the walls.

“Fortunately, because of our past experience we had done a lot of modelling of where the floodwaters could potentially go so we had well defined and communicated flood management plans – if the water reaches X height at X station, we were ready to start packing,” Reid says.

The day before the flood peaked, Reid’s team of 14 helped pack the office, and move equipment to higher ground before they were sent home.

Sure enough, the next day floodwater entered the ground level office and rose about 20cm up the walls.

“We had five days to see it coming and then about six-to-eight hours to prepare the day prior so we could do it all very calmly and methodically.”

Reid’s business is on a property she owns and lives on, beside the Nogoa River.

She was uninsured but, in the final wash-up, relieved the event cost her (then) $3 million turnover business only $20,000 for a new kitchen and floor coverings because of its watertight flood management plan. Part of the cost was covered by government grants for affected residents.

The business is today turning over about $1 million since regional mining activities have slowed.

“Our house is on the highest point of the acreage on stumps and that’s where we stored all the office equipment and boxes.

“I remember watching the water rising from up on my verandah. I didn’t get any sleep that night … if it had come any higher, we were screwed. But as soon as the floodwaters went down we went in with hoses and cleaned and ripped up the floor coverings and within 24 hours we had one computer back up and were connected to the internet and able to service our clients, who needed data on the flooding and within 48 hours we had all computers back up and running on plastic folding tables with bare concrete floors.

“We worked like this for just over six months to let everything dry out, but we were relatively minor compared to many, who had water up to their ceilings.

“My biggest advice to other small businesses is to always ensure you have off-site back-ups and don’t ever store important documents at the bottom of your filing cabinets.”

Fires

David Sonter watched his family business in Springwood burn to the ground while he fought off flames threatening his family home (which shares the 10-hectare property).

Sonters Fern Nurseries, founded by his father more than 40 years ago, was destroyed in the Blue Mountains bushfires in October 2013.

“The day started as a pretty normal day but by midday it was apparent there was a fire in the local vicinity and it was very big, intense and moving quickly,” Sonter says.

In the end, it took less than an hour to destroy everything but the house and its immediate gardens.

The next day Sonter, family and some of his staff began assessing their losses. Their broker began managing their insurance claim assessment.

Several million dollars worth of damage was recorded.

The business stopped trading for two weeks and was touched by the way the nursery’s corporate customer base, including giants Bunnings and Aldi, immediately offered  help.

Sonter says when nature unleashes “the gloves come off in a good way” between businesses who are usually rivals.

“The greenhouse was 10,000 squares and destroyed although about 300 square metres of space, although damaged, still contained plants  still saveable so we could at least have some plants ready for the next season.

“We also had a cut foliage crop, which we sold to florists so that continued, which also helped.”

Twelve months on, the business, one of three major nursery outlets trading nationally under Sonter’s company structure, was back to pre-bushfire revenue.

In 2014/2015 the company turned over “under $5 million”.

“My mother and father, my business partners, have always been big on the importance of insurance; not just having it but having adequate insurance.

“Also, small businesses should not be guarded with sharing information with their insurers. In my experience, it is far better to be transparent; if they ask for a document, provide them with 10.”

Insurance problems

ICA general manager of insurance and media relations, Campbell Fuller, says it is impossible to know how many businesses are uninsured for damages caused by natural disasters. However, he can cite research conducted by the ICA last year, which found the overall rate of non-insurance in the small business sector has fallen.

The ICA’s 2015 survey reporting a non-insurance rate of 12.8 per cent compared with 25.6 per cent reported in 2007.

Fuller says the ICA does not know the exact value of insured losses per annum to small businesses but “typically finds that after any natural disaster, 20 to 25 per cent of losses are commercial”.

“About 80 per cent of claims (by value) from last year’s SA Pinery bushfires were for commercial losses.”

On January 13, ICA figures showed insured losses from the Waroona bushfire in southwest WAhave reached $60 million including several hundred claims.

The Great Ocean Road Christmas Day bushfire last month destroyed 116 properties and resulted in an insured loss of $53 million.

The Pinery bushfire in November resulted in 1861 insurance claims worth about $169 million.

Fuller adds that recent bushfires “are unlikely to have a significant impact on most insurance premiums”.

“Insurers are well capitalised and able to absorb the financial impacts of the losses, which were within expectations … in a highly competitive market, the ICA recommends small business owners shop around for policies that best meets their needs, based on features rather than price alone.

“An insurance broker can often help develop a package of policies to suit individual business requirements.”

Hail

Ben Menkins co-owns Merritt’s Bakery in the country Queensland town of Chinchilla.

He bought the 30-year-old business on September 1, 2014 and vividly recalls the day nature’s fury unleashed on his small business and its market.

It was October 28 last year.

Menkins remembers golf-ball-size hailstones, torrential rain and gale-force winds “hit us out of the blue”.

“There were warnings of severe storms that day but nothing like this;  it was a super storm, a convergence of storm cells,” he says.

“So we were just trading as normal right up until it started at 3pm.”

Over the next hour giant icy chunks filled the gutters and froze, which blocked the drains.

This meant rainwater had nowhere to go and started seeping into the roof cavity, flooding the ceiling and running down the walls. It ruined Menkins’ high-end baking machinery.

The damage bill reached about $250,000 excluding the building repairs, which will fall under the building owner – their landlord’s – insurance.

If not for his insurance damage cover, and additional business interruption policy to compensate lost income for the three weeks doors were closed, Menkins says his $2.1 million wholesale and retail baked goods business would have failed.

This money paid most bills while the insurance claim and repairs  were afoot.

Menkins recommends other small businesses use an insurance broker because, in times of crisis, when you are focused on staff and logistics “their service and dealing with the insurer and contractors for you is invaluable”.

“Three weeks later we began trading again and our customers immediately returned, which was great but if we didn’t have insurance we wouldn’t be here today. It’s that simple. We would have gone under.”