The Insurance Council of Australia has rejected complaints that flood policies are too complicated and is instead blaming customers for not reading their contracts.
Federal Treasurer Wayne Swan has foreshadowed changes to the insurance industry as part of the Government’s response to the Queensland floods.
The industry has been facing criticism about policies being complicated in terms of whether flood cover is for a river flood, a flash flood or a problem with storm water.
Concerns have also been raised over insurance companies refusing to compensate people who thought they were covered for flood damage.
But Karl Sullivan, the insurance council’s general manager of risk, says customers are often complacent.
“Most of the definitions are written in very plain English and are very simple for a layman to understand,” he said.
“Unfortunately a lot of people maybe don’t make the effort to understand what the risks are that they’re facing.
“Complacency is one reason. Before I joined the industry I think I was probably one of those people who didn’t pay a lot of attention to reading policy documents. I certainly do nowadays.”
Many Queenslanders in brand new developments who had their homes flooded are questioning how flood mapping allowed that to happen, and what it will mean for them when they want flood insurance in the future.
Mr Sullivan says when providing flood cover, the insurance council relies on flood mapping from local councils, which these days is “very accurate”.
“We find that the State Government’s got a very good land use planning policy … these things can always be improved over time, but in general councils deal more with legacy issues – old decisions made on poor mapping and we find particularly councils like the Gold Coast and Brisbane, you would have to work very hard to fault them on planning decisions,” he said.
Mr Sullivan says insurance is based on risk.
“So if you’re in a flood zone or on a flood map, you will find that insurance is offered to you on the basis of the interpretation of that risk,” he said.
Some Queenslanders say they have not been able to get flood cover, but the industry says that is a furphy (rumour).
Mr Sullivan says flood insurance is available – at a price – to everybody in Queensland.
“It can be expensive if you’ve got an extreme risk of flooding, but that’s a very very small percentage of properties,” he said.
Wayne Swan says insurers should deal with claims quickly and fairly, but does acknowledge that there appear to be grey areas.
“I don’t think there’s any doubt that there is a need for reform in this area, but at the moment we’re concentrating on dealing with the practical realities of what people are facing today,” he said.
“What’s very important [is] those with insurance get their claims submitted.”
Queensland Premier Anna Bligh also admits the scale of the flood devastation has highlighted major shortcomings in the current disaster insurance system.
Insurance experts expect claims arising from the floods to top $1 billion.
Source : ABC News
