Flood policyholders should all receive industry-standard, consistent advice from insurers explicitly detailing what to do in relation to making a claim, providing evidence and not invalidating their cover, a new Natural Hazards Research Australia report says.

This should be consistent across insurers to counter conflicting advice and misinformation, it says, and be provided to all new and renewing policyholders with flood cover.

“Ideally, there should be an accepted national industry standard for what information customers need to provide to support their claims,” the survey, based on a poll of over 600 victims of last year’s record floods, says.

“This would help to reduce the likelihood of incorrect and contradictory advice being given from other sources, or each policyholder having to contact their specific company or broker for reassurance.”

The researchers interviewed 192 flood‐impacted residents in August-October, and held an online survey that finished in February of 430 flooded residents – two thirds from NSW and a third from Queensland.

They recommend insurers provide “detailed and explicit” checklists of what customers need to do after a flood event – and what they should not do, and “make this as clear, simple, and achievable as possible”.

Harmonised advice would also inform helpers, who could be provided with factsheets to
give to residents, including information about how to salvage different items.

“The confronting immensity of the waste, unnecessary disposal and a willingness to ‘throw everything out’ and buy new was a source of distress,” the flood-victim poll said.

The industry-wide advice should not make assumptions about what can be saved but detail what can be done to “try to save items of value or how to check if some white goods could be saved/continue to be use, once sanitised and dried out”.

Comments relating to insurance were made by most residents in interviews, with documenting losses, delayed assessments, being “in limbo” and arguments about stormwater versus floodwater damage frequent issues.

Several mentioned additional damage done while waiting to be allowed by insurers to take action.

“In some locations there was disquiet about the flood assessment process,” the report said. “There was a feeling that there was poor, systematic advice being given. There were many comments about money being wasted.”

Some residents without insurance were able to make decisions such as selling their home “much faster” than those in complicated and protracted claim and dispute processes with insurers. One said they declined flood cover after their premium rose to $12,000 but that “in the end it might be a godsend that we didn’t have the insurance”.

 “Anyone who’s got flood insurance is not back in their home. We’re lucky, we’re in our house. We now have new windows, walls, doors. These other people are still living in limbo in rental properties.”

Residents felt frustrated by the lack of choice and freedom when arranging repairs and reconstruction through their insurers. Approved suppliers were felt to be charging too much and “doing a poorer job”.

People who “did what they were told, they’re the ones that are suffering, they’re the ones that are selling their houses for next to nothing,” said one.

“Rainforest timber does not need to be ripped out, I kept my sink … I didn’t let
that (company) in my house. My place is already cosy again. I’m sorry for all those people that listened.

“There should be a Royal Commission because all the insurance companies use them and the governments use them, and we’re given no option.”

Of 384 residents polled, 17% had no home/building cover, 56% had flood cover and 27% had insurance but were not covered for flood. For contents, 53% had flood cover while 23% were not insured at all.

The researchers say the insurance industry needs to better prepare for “likely worse” future events, and more advocacy roles and personal support services to navigate the claims process are required.

“Plans and contingencies need to be in place to improve surge capacity in future,” it said.

Deloitte is to publish an industry-commissioned report examining the performance of insurers during the floods later this year.

Insurers had to deal with 240,000 claims from the event, and a shortage of materials and building trades.

Click here for the full Natural Hazards Research Australia report.