Tuesday, 25 October 2011
Australian Insurance Industry Slammed After Rejecting Flood Claims
A consumer consumer-watchdog organization in Australia said the nation’s insurance industry acted dishonorably this year after the continent suffered severe flooding. Choice hands out yearly Shonky Awards to services and products that are deemed to be highly questionable.
After flooding ravaged parts of New South Wales, Queensland, and Victoria in December 2010 thousands of Australians were left homeless. However, they figured there might be some light at the end of the tunnel since they had flood insurance. But after filing claims with an assortment of insurance companies, thousands of homeowners had their claims rejected.
Choice said that most insurance agencies had made their policies so complicated that many policyholders were unsure if they were covered and some of the policies didn’t even make it clear what exactly constitutes a flood.
Queensland Legal Aid said that about 30 different insurance firms have shot down claims from homeowners. According to the organization, about 15 per cent of all claims have been rejected, which represents about 8650 claims in total. Choice did have praise for one company though, when it said Suncorp Insurance has been making compassionate payments to many of its customers.
Queensland Legal Aid said insurers were selling policies with huge gaps in them and didn’t bother to tell their customers. A legal aid lawyer said thousands of people thought they had adequate coverage, but have sadly found out this isn’t the case. According to an article in the Sydney Morning Herald, the lawyer said she’s been working on flood insurance cases for the past year and still can’t make heads or tails of some of the policies even after reading them several times.
Choice reported that thousands of policyholders lodged complaints with Queensland Legal Aid after their claims were rejected. The group said that many people were dissuaded from filing claims or had them summarily dismissed. In addition, it was reported that some claims were rejected even after insurance agents confirmed they’d be accepted.
Of course, the Insurance Council of Australia didn’t agree with the findings of the watchdog group and said that Choice's behavior is irresponsible. The chairman of the council said the news that Choice is spreading could cause some property owners to forgo buying the flood insurance they need. He also said that only 725 claims were investigated by Australia’s ombudsman.
