Insurance staff talked about their own bonuses in front of devastated claimants while attending a forum intended to help flood victims, an inquiry heard today.

The House of Representatives Standing Committee on Economics, which is looking into insurer responses to the record-breaking 2022 floods, was told by financial counselling groups that consumers felt they had been “coerced and gaslit” into early cash settlements that were inadequate to repair their homes.

On the second day of the inquiry, insurers were accused of setting up incentives to reward staff for cash-settling claims earlier and dissuading consumers from taking on financial counselling.  

Financial Counselling Victoria Executive Officer Zyl Hovenga-Wauchope said insurers had a “misalignment of interests” and engaged in “very vindicative behaviours” against policyholders seeking financial counsellor assistance.  

“The interest of insurers is very clearly to do as little as they possibly can to help people who just experienced these catastrophic events and are simply advocating for their homes and their livelihoods,” Mr Hovenga-Wauchope said.

He highlighted a “substantial imbalance of power” between insurers and consumers that he said led to hostile and inconsiderate tactics against vulnerable customers.

“It is very difficult for [consumers] to advocate for their interests in ordinary circumstances, let alone in the context of having just had all their possessions and home destroyed,” he said.  

The inquiry also heard that insurers incentivised case managers to complete early cash settlements and pressured customers to feel they would receive lesser offers if they waited.  

Anglicare financial counsellor in north-central Victoria Laura Powell said she witnessed open discussions regarding bonuses during an Insurance Council of Australia (ICA) forum in Rochester.  

“We’ve certainty seen the tactics to make people settle earlier and, unfortunately, were exposed to insurers’ representatives on the floor of an ICA event talking about their bonuses in front of people who were crying,” Ms Powell said.

She also accused insurers of lying about sending reports to customers and using “bullying tactics”.

“I will say that they lie,” Ms Powell said. “I’ve sat with them, and they say, ‘We have provided this evidence to you,’ and we have been able to show that they haven’t.”

ARC Justice Director of Strategy and Impact Kate Clohesy said some customers accepted cash settlements because they no longer had the energy to dispute a claim.  

“There is an element of people accepting cash settlements because they have run out of puff,” she said. “People have seen that it is a game, and people make the decision that they have played too much and are dipping out with what they can get.”

Australian Consumers Insurance Lobby Chair Tyrone Shandiman challenged Suncorp to address a Gold Coast claim he described as “one of the worst” he has seen.  

Mr Shandiman said the insured, referred to as Sebastian, had been promised by the insurer that it would address mould damage, but after weeks of no responses, he attempted to clean it himself.  

He said Sebastian fell from his roof while attempting to clean the mould, leaving him with two broken legs and a permanent disability.

“Suncorp’s motto is ‘building futures and protecting what matters’, and I would argue that, in this instance, Suncorp did the exact opposite of its motto,” Mr Shandiman said.  

“They destroyed Sebastian’s future, and their reckless handling of their claim neglected what matters, and they were not there for him in his time of need.”  

The inquiry will hear from the Australian Securities and Investments Commission and Australian Prudential Regulation Authority tomorrow before the ICA and insurers appear next week.