More training is needed to improve responses to policyholders experiencing “acute vulnerability” after the trauma of major natural catastrophes, RACQ Group CEO David Carter has told a parliamentary inquiry.

He says RACQ and the industry have become better at identifying policyholders with chronic underlying vulnerabilities such as physical or mental health problems, or who may be elderly or experiencing domestic violence.

“We can do more and we can do better to respond to people who are under duress at the point in time,” he said. “People could be incredibly well educated, have very stable lives, everything going right for them. Events can be very derailing if they have never had to claim before.”

Mr Carter says responding effectively includes showing empathy in conversations and ensuring interactions don’t come across as mechanistic processes, as people are dealing with devastating events.

“It is a different type of vulnerability, it is the uncertainty and concern and almost fear of what is going to happen, given the damage that has been incurred. We need to do more training for that specific aspect.”

Mr Carter supports suggestions that regulators should collect more data on claims handling time frames and dispute resolution, and says a measure of the percentage of claims accepted may also provide key information.

“We think that would be another important metric for the consumer,” he said.

RACQ says it changed its claims handling after shortcomings were identified following hailstorms in 2020, and is continuing to make improvements. These include bringing more expertise in-house, improving communications with policyholders and lifting oversight of repairers on its panel, the inquiry committee was told.

The House of Representatives Standing Committee on Economics is examining insurers’ responses to the 2022 floods, which included the record-breaking catastrophe affecting Queensland and northern NSW.

RACQ also told the committee improvements should be made to the Cyclone Reinsurance Pool, including an extension of the 48-hour cut-off for cover after a cyclone is downgraded. Issues with the cut-off were highlighted this summer by Cyclone Jasper, Mr Carter says.

“We would welcome a fast-track review that would bring timely improvements,” he said today.

Meanwhile, MD of Allianz Australia Richard Feledy has apologised to customers who were “let down” following the floods, but says a common theme in the inquiry hearings so far has been the “sheer volume of claims” exacerbated by post-covid challenges.
 
“Regardless of these challenges, I want to be upfront in acknowledging that we let down and disappointed some of our customers,” he said. “In some instances, our actions created further stress and anxiety. To these customers, I’d like to convey my deepest apologies.”
 
He says Allianz has carried out its own review, as well as participating in those led by the industry and regulators, and has made significant investments in technology and training.
 
Mr Feledy says he hopes the inquiry can provide a platform for a “constructive conversation” about affordability of insurance.
 
“The harsh reality is that flood insurance affordability is becoming worse,” he said.
 
He says Allianz supports investment in mitigation, tax reform, the end of building on floodplains “and exploration of options such as a government-backed flood reinsurance pool to help address the affordability of insurance for existing highly exposed properties”.
 
He says the catastrophes have brought into question the viability of Allianz’s optional flood product, which allows customers to opt out of flood cover.
 
But he says the company has been considering “a range of product innovations such as a simpler capped flood insurance product that provides some cover at a more affordable cost”.
 
Independent MP Andrew Gee asked Mr Feledy why it has taken so long for him to apologise publicly, and referred to the case of vulnerable resident Geoff Foreman, whose home in Eugowra, NSW, was hit by floods.
 
Contractors who attended the home conducted an excessive strip-out after getting Mr Foreman to sign a waiver without providing the full information, Mr Gee says.
 
Allianz accepted that Mr Foreman was shown only the “back page” of the waiver, and that mistakes had been made by the contractor, but has apologised and says it was already reviewing the case when Mr Gee got in touch.

It says it had 40 claims from Eugowra and not one of the customers had flood cover.