Insurance companies are blamed for consumer confusion over what constitutes storm and flood cover, according to Australia’s competition watchdog.
Floods in Victoria, NSW and Queensland have killed at least 32 people, inundated more than 30,000 houses and businesses and in Victoria along destroyed crops worth $1.5 billion.
It has been reported that up to 40 per cent of those affected might not be covered, despite believing their policies protected them in the case of flooding.
Many residents may get nothing from their insurer.
Most of the confusion comes from what is determined to be storm damage and what is classified as “riverine” flooding, where water rises from natural or man-made waterways.
Insurers have been blaming the Australian Competition and Consumer Commission for not approving a common definition of inland flooding three years ago.
But ACCC chairman Graeme Samuel hit back yesterday, saying the industry’s proposed definition was flawed and imprecise.
He was concerned the Insurance Council of Australia’s planned definition of flooding could have been used “as much to exclude flood cover as it could have been used to include it.”
Others to raise concerns are the Consumer Law Action Centre, the Consumers’ Federation of Australia, the Australian Securities and Investment Commission, the Legal Aid Commission of New South Wales, Legal Aid Queensland and the Insurance Law Service.
“We got a response from ASIC and the National Insurance Brokers Association and from several consumer groups who said, ‘No, no, no, this is not going to work’,” said Mr Samuel. “They all believed the definition the ICA came up with was likely to cause more confusion than clarity.”
The ICA’s common definition of flood was proposed to be voluntary, a guideline rather than a benchmark, and one that insurers could modify at will.
Last week Treasurer Wayne Swan and Assistant Treasurer Bill Shorten met the ICA to discuss the issue.
Mr Shorten, referring to anger in the affected areas, said later the community “has an appetite to get this right once and for all”.
He is due to meet the insurance industry tomorrow.
Source : The Herald Sun
