Insurers cop criticism over 600 quake claims
A string of earthquakes in Muswellbrook, NSW, has led to more than 600 claims and criticism of insurers from local politicians, who have labelled the response “a joke”.
Muswellbrook Shire Council surveyed residents after four significant quakes and nearly 50 aftershocks in the past three months, which it says resulted in “widespread structural damage and mental anguish”.
About 200 people responded to the survey, which indicated more than half of all insurance claims had been rejected.
However, the Insurance Council of Australia says insurers are working hard to progress unresolved claims and it expects “the majority” to be paid in full or in part.
Muswellbrook’s Mayor Jeff Drayton said: “The response from insurance companies has been a joke. They have taken so long to assess the claims, only to reject them, leaving people in limbo and wondering what’s the point of insurance.”
insuranceNEWS.com.au understands that while earthquakes are routinely covered by home policies, they often throw up claims for damage that was in fact caused by gradual earth movement or other excluded factors.
Such claims can be lodged when a customer checks their home after a quake and finds pre-existing damage they were previously unaware of. A Victorian earthquake in 2021 resulted in significant numbers of cases going to the Australian Financial Complaints Authority, many of which were resolved in insurers’ favour.
An ICA spokesperson told insuranceNEWS.com.au insurers have received 603 claims following the Muswellbrook events – comprising 536 personal and 67 commercial claims.
“When assessing a claim relating to an earthquake, insurers engage expert engineers to assess potential damage,” the spokesperson said.
“In many cases, the defects identified are existing cracking due to normal ground movement and temperature changes over time that may not have been noticed previously.”
ICA says expert engineers can “easily distinguish” between earthquake damage and other causes.
“Insurers are working hard to progress outstanding claims and expect the majority of claims to be fully or partially accepted,” the spokesperson said.
“As with any claim, if a customer does not agree with their insurer’s decision, they are able to have the decision reviewed. If they are not satisfied with the internal dispute resolution outcome, they can make a complaint to AFCA, which is able to make rulings that are binding on insurers.”
There has been speculation that the quakes may have been caused by nearby coal mining activity, but this has not been proven.