Inquiries into flood insurance

There are a number of reviews of flood insurance taking place in Australia:

• the Queensland Floods Commission of Inquiry examination of the performance of insurers in meeting their claims responsibilities
• the Commonwealth Natural Disaster Insurance Review
• the House of Representatives Standing Committee Inquiry into the operation of the insurance industry during disaster events
• the Commonwealth Treasury consideration of proposed reforms to insurance polices.

The information below sets out what the Queensland Floods Commission of Inquiry will address and provides some information about the Commonwealth Government and federal parliamentary reviews.

Queensland Floods Commission of Inquiry
The Commission’s terms of reference require it to examine the performance of private insurers in meeting their claims responsibilities. This will involve an inquiry into the performance of private insurers in processing and deciding flood related claims including, but not limited to:

• the timeliness, or otherwise, of processing claims
• the adequacy, or otherwise, of the assessment process
• the adequacy, or otherwise, of communication between the insurer and the insured
• the adequacy, or otherwise, of complaints processes about the claims
• whether any potential claimants have been inappropriately dissuaded from lodging or pursuing a claim.

The Commission is considering submissions and other material on insurance related matters, and it will hold public hearings in Brisbane and a number of regional centres. Hearings have been scheduled for:

Further details of these hearings, including venues and times, are available on the Commission’s website: www.floodcommission.qld.gov.au.

The Commonwealth Natural Disaster Insurance Review
The Commonwealth is conducting a review into natural disaster insurance arrangements. The Commonwealth’s review is looking, in particular, at the systemic questions of how disaster insurance should operate generally.

Issues the review will consider include: the extent of underinsurance and non-insurance; the ability of private insurers to offer adequate and affordable cover; how to enhance consumer awareness about scope and coverage of insurance; future insurance premium levels; whether insurance should be subsidised or provided through a national disaster insurance program; and how disaster mitigation strategies affect availability and affordability of flood and other disaster insurance.

Submissions to the Natural Disaster Insurance Review closed on 14 July 2011. The report from the Natural Disaster Insurance Review is due to the Australian Government by 30 September 2011.

Further information on the review can be found on its website at www.ndir.gov.au. 

The Commonwealth Treasury review
The Commonwealth Treasury has also been consulting on proposed reforms to insurance policies relevant to flood cover.

Submissions responding to the consultation paper Reforming Flood Insurance: Clearing the Waters closed on 13 May 2011. The consultation paper is available at www.treasury.gov.au.

Parliamentary Committee Inquiry into the operation of the insurance industry during disaster events
The House of Representatives Standing Committee on Social Policy and Legal Affairs is examining the performance of the insurance industry in assessing claims following the 2010/2011 extreme weather events. Unlike the Queensland Floods Commission of Inquiry, the Parliamentary Committee is inquiring into the insurance related matters arising out of Cyclone Yasi and other non-flood related disaster events.

The Committee will consider: claims processing (including information provided to customers, timeframes provided and the engagement of external third parties or consultants); the insurance industry Code of Conduct; and the effectiveness of dispute resolution for claimaints (for example the Financial Ombudsman, Legal Aid or community legal centres).

The full terms of reference are provided on the Committee’s website: www.aph.gov.au/house/committee/spla/index.htm.

There has been no date set for the Committee to provide its report into these matters. The Committee will hold public hearings in Brisbane, Ipswich and Toowoomba on flood related insurance matters. It will also hold public hearings in Cairns on cyclone related insurance matters.