Experiences from the record-breaking floods will feed into the next Code of Practice review, which is due to start from the end of this year, Insurance Council of Australia (ICA) CEO Andrew Hall says.

Mr Hall told an ICA Annual Conference session yesterday that considerations around how to better respond to extraordinary events included workforce planning, improving communications and managing policyholder expectations.

ICA will later this month release a Deloitte report it commissioned on insurers’ responses to flooding early last year in Queensland and northern NSW. The event, which triggered $6 billion in claims, was followed by further catastrophes that stretched resources.

“It has been a massive learning curve for us,” Mr Hall told a conference session titled Lessons from Floods. “Hopefully out of this next process you’ll see some tangible commitments we’re going to make and some of those will go as well into a review of the code of practice.”

The code was overhauled after an extensive review for the 2020 iteration, which took effect in 2021, and revisions have since been made to the “living document”.

Mr Hall says the next review is due to begin at the end of this year and will be an opportunity for the industry to look at what needs to be done “over and above” industry regulation.

ICA is also looking at action on wear and tear exclusion concerns, which have been raised by the Code Governance Committee, the Australian Securities and Investments Commission and consumer groups.

Mr Hall says the industry is considering a possible standard clause, which would require an Australian Competition and Consumer Commission authorisation process.

“We probably as an industry need to do a better job of explaining to people what we mean by maintenance and wear and tear,” he said.

Mr Hall says home maintenance often isn’t front of mind, compared to the focus on regular car servicing, and there are issues around understanding its impact on insurance cover.

“An insurance policy is not a warranty. That’s probably the other big concept that we are grappling with. A lot of people seem to think it’s a warranty,” he said.

“Two jobs we are going to need to do in the next few months. One is lean into whether or not a standard clause will help, and how to do it. And number two, a large-scale education campaign around maintenance, wear and tear, and the like.”

Australian Financial Complaints Authority (AFCA) Lead Ombudsman Insurance Emma Curtis says even lawyers at the organisation can argue for a long time over maintenance clause interpretations when disputes are considered, and wordings need to be written with retail buyers in mind.

“It shouldn’t be up to the end user to try and work out what the policy means. They should be drafted for the purchaser,” she told the session.

Legal Aid Queensland Principal Lawyer Paul Holmes said insurers have slightly different maintenance interpretations, policyholders don’t know what’s required of them, and exclusions are applied without linking a maintenance issue directly with the damage.

“Saying that there was a lack of maintenance, therefore we won’t pay doesn’t cut it, and saying ‘there’s a loose screw in the roof, therefore we won’t pay’ doesn’t cut it either.”

Expert reports should show that where something wasn’t properly maintained, if it had been, the damage wouldn’t have occurred or would have been substantially less, he told the conference.

“That’s the causation that I see routinely missing,” he said.