The inquiry, which began in August 2023, looked into the response of insurers following floods across the country in 2022, including the October floods that devastated Rochester.
It investigated the “three Ps” of flood insurance; that policyholders need to be treated better, pooling mechanisms need to be strengthened and preparation needs to be given more priority.
Submissions were received through a survey and public hearings, including the April 18 hearing held at Rochester Shire Hall.
Rochester residents contributed a range of submissions to the inquiry from the hearing and the survey.
In her first of two written submissions, Rochester Community House manager Amanda Logie highlighted the problems her team had seen first-hand through the service’s support role.
“Delays in payments to clients, underpayment of cash settlement amounts, lack of details within scope of works provided (in some cases, whole rooms have been missed), very poor communication between insurers and their clients, engagement of incompetent tradespeople, lack of empathy and lack of mental health support,” she said.
“While it may appear that we are being quite negative towards the insurance companies, it is because we always tend to hear the negative experiences, there are some clients who have a great experience, but when the damage and impact is so widespread, there has been far too many horror stories as opposed to the feel-good stories.”
During the April 18 hearing, former Campaspe Shire mayor and councillor Leigh Wilson presented to the committee, sharing his experience and what he had seen over the previous 18 months.
“I used to say that not all of the insurance stories we heard have been bad; there have been some good ones,” he said.
“But just recently, talking to someone that I believed had a good insurance outcome, I heard that they have still been caught up in the poor quality of the trades that have undertaken that work and, even after being back in their house for several months, they’re still waiting for trades to come back and rectify minor issues.
“But at least they’re in their house, unlike another local couple, an elderly couple that were so excited to get back into the house prior to Christmas but, when they were moving back into the house, found so many problems with the house that the insurance builder told them they would have to move back out of the house so they could do a further strip-out and repair things.”
The inquiry report is titled Flood failure to future fairness, which committee chair and Federal Member for Fraser Daniel Mulino said reflected “the collective failure by insurers to meet their obligations to policyholders after the 2022 floods, and our hope for a fairer system in the future through the 86 recommendations in this report”.
Key recommendations from the report include:
- registration of the General Insurance Code of Practice with the Australian Securities and Investments Commission; and that the code be made enforceable through insurance contracts.
- standardising key terms across all insurance contracts through legislated definitions, including “rainfall runoff”, “storm surge”, “wear and tear” and “lack of maintenance”.
- new regulatory guidance by ASIC to clarify that insurers cannot deny claims based solely on expert reports that do not link the damage observed with the reported cause, including for hydrology and building reports.
- requiring insurers to provide guidance to policyholders on any maintenance obligations up front, and that there be a presumption of coverage in cases where maintenance would be infrequent, costly and highly irregular, like stumps
- requiring insurers to make a decision on whether to accept or deny a claim within 12 months, and if that doesn’t occur, that they be required to accept the claims in full.
- requiring insurers to report key data on claims management performance to ASIC quarterly and, after a natural disaster, monthly; and that this data be published at the insurer and brand level, along with data on breaches of the code of practice
Dr Mulino drew some conclusions about the actions of insurers following the multiple flooding events across the country in 2022, in line with many Rochester residents’ experiences.
“Too many cases were badly mishandled. Inconsistent decision-making meant neighbours received different outcomes after the same event,” he said.
“Long delays caused emotional, mental health and financial strain.
“More than two years on, many people still can’t go home. Initial offers were often too low, which was especially problematic for cash settlements.”
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