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Inquiry into insurers' response after Feb 2022 flood describes evidence as "very concerning"

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Lara Leahy

11 April 2024, 10:48 PM

Inquiry into insurers' response after Feb 2022 flood describes evidence as "very concerning"

The Standing Committee for Economics Inquiry into insurers’ responses to 2022 flood claims made its way to Lismore yesterday. It heard about experiences from locals, lawyers, charity workers, and others who can lend their experiences to shape what has and is still transpiring over two years after the 2022 floods.


Committee Chair Dr Daniel Mulino MP described the event as "the biggest natural disaster in Australia’s history by dollar value and number of claims, and this region of the Northern Rivers was hardest hit. It’s absolutely critical for us to see how the insurance companies performed in this region, and we heard evidence today that was very concerning.”


Dr Mulino spoke of the people, including householders, whom he has heard from. “Importantly we have heard that there are a number of cases of individuals that still have not had their claims resolved more than two years after the fact.”


"If you have a story to tell," Dr Mulino urges, “Now we are really keen to get into the community to hear directly from affected people.” You can contribute by filling in a survey.


Contributions will assist in the aim to introduce changes to the regulatory environment to ensure the management of future events will be improved.


In the discussion with the Committee, the action of insurers was described by Hon Kevin Hogan MP as too slow, dispute resolution took too long as well as a myriad of communication issues that heavily contributed to the confusion and overwhelming experience of a traumatised community.


Mr Hogan requested that insurers have to publicly report “how long it takes a claim to process, how long a dispute takes to be resolved and how are those disputes resolved in favour of the company versus the customer.”


(Mr Hogan addresses the media yesterday)

There were many allegations made of property going missing as part of the Make Safe program following the floods. Valuable timbers and fixtures were removed from houses that need not have been taken, and damage done in the process of their removal. 


Elly Bird spoke for Resilient Lismore and commented: “that materials were unnecessarily removed from homes and when those contractors were challenged, the homeowners had no recourse.” She put it to the committee that “If anything can be done to regulate the Make Safe contractors and regulators, that would be a vast improvement on a very problematic experience.”


“Now that almost sounds a bit like theft to me. There's been a lot of experiences where people have been literally broken into.” Mr Hogan said, “I am making recommendations about that program because what happened in a lot of cases is not ok.”


Dr Mulino suggested that “regulatory arrangements aren't strong enough in relation to insurers entering a property or someone acting on behalf of insurers - that could be an important recommendation. One way to promote more accountability is to report more transparency about how many cases are unresolved by that insurer.”


Elly Bird also spoke about the power of the Two Rooms project and the interest the concept generated by the Committee. Instead of trying to renovate an entire property, they ensured a bathroom and living space was enclosed and lockable, insulated and able to be heated, and where it was safe to use electricity.


The remainder of the house could then be resolved and fixed as time permitted. It allowed people to remain in their houses reducing recovery time and the pressure of finding alternate accommodation.


Insurance communications regarding what affected people were expected to do or not to do following the floods caused a lot of consternation. Elly Bird confirmed this: “Today in the inquiry, we have heard a lot about trauma-informed communication.”


In some cases, certain people were told to get what they could out of their properties, while others said they were not to return to or enter their houses. 


Mr Hogan spoke of his friend's son, a builder, who was told “he could not return to his house until the insurers people had made a proper assessment.” The mud and moisture left to fester made the house's condition a lot worse with mould taking over. 


Insurance companies said they did not restrict people from re-entering their houses. However, Mr Hogan, himself was given a directive to not enter his office until it had been properly assessed.


The miscommunication provided by insurance companies to customers following the floods has been found to exacerbate issues from the very beginning of the recovery stage. It was described as “re-traumatising”.


Ms Bird outlined the call to the Committee that “Communications need to be clear, concise, in a written form and decisions need to be clearly explained, and insurance companies and all other bureaucracies to support people through their paths to recovery.”


To help speed up the processing of insurance claims in situations such as these, a panel has been suggested to assist with the standardisation of processes. Mr Hogan spoke of the example of hydrologists who became vital to assessing the type of damage caused to a building, e.g. by storm water or flood water. By assessing a few houses along a street, the information can be added to a model to group locations where flooding or stormwater caused damage, reducing the need for testing every building.


Dr Mulino also said that having claimants and insurers alike seeking information from a panel will create a more even/neutral basis of information distribution.


Mr Hogan was asked about the role of the CSIRO and the issue of future insurance expense. Mr Hogan is of the strong belief that flood mitigation is the answer. He spoke of an example of water holding ponds where water can be diverted to, essentially, reduce a flood's peak, allowing the water to drain in a controlled manner once the flood risk has subsided, reducing flood impact and insurance reliance.


The final report for this enquiry will be handed down by the end of September 2024.

For the full terms of reference the Committee takes into account, here is the government's media release from August last year.

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