The decision by consumer advocate Choice to include the insurance industry in its 2011 Shonky Awards was irresponsible, Insurance Council of Australia CEO Rob Whelan says.

“The only thing that stands out as shonky is Choice’s reprehensible decision to list an important insurance product, which is helping tens of thousands of householders and businesses recover from natural disasters, alongside specious consumer goods,” he told insuranceNEWS.com.au.

Last week Choice referred to “thousands of homeowners left high and dry by insurance companies that rejected their [flood] claims. In some cases, policyholders failed to read their policies carefully. In numerous others, insurers made it all but impossible to know whether they were covered for flood or not – or exactly what a ‘flood’ is.”

The industry was listed alongside such products as a suspect games app aimed at small children, a passenger car with a low safety rating, unsafe children’s jewellery and various products being offered with insupportable marketing statements.

Mr Whelan says Choice’s inclusion of insurance may dissuade people from taking out insurance cover. He says Choice is “simply wrong” and does not understand the issues or data associated with the floods.

Of the 130,000 claims made after the Queensland floods and Cyclone Yasi, only 3987, or 3%, were rejected. 

Many consumers on the Choice website have accused the organisation itself of being shonky. Choice spokesman Andy Kollmorgen told one critic the award was made “on the balance of evidence that insurers overall left too many customers in the lurch, either through unacceptable conduct following a claim or unacceptable conduct in selling the policy”.

“Even if these cases amount to only a fraction of claims made or attempted – or policies sold – we believe it is unacceptable and worthy of shonky recognition given the stakes involved and the number of injured consumers.”