The parliamentary floods inquiry has recommended reforms to ensure “the negative impacts of the next flood event or natural disaster are not further compounded by insurers’ poor claims and complaints handling”. 

The inquiry report, released on Friday, contains 86 recommendations in response to the 2022 flooding catastrophes. The proposals are mostly directed at the industry and improving regulation, and extend to government action on mitigation and resilience.

“The Australian insurance industry must be able to properly support policyholders in times of crisis, even where that disaster is catastrophic in scale,” the report says. “The recommendations will also provide guidance for governments to address the lack of support for homeowners in flood-prone areas, given the emerging issue of flood insurance accessibility and affordability.” 

Inquiry committee chair Daniel Mulino says the report title, Flood Failure to Future Fairness, reflects “the collective failure by insurers to meet their obligations to policyholders” after the floods, and the hope for a fairer system in future. 

The Insurance Council of Australia says it will review the report and has already made progress towards many of the recommendations, including work on a potential standardised maintenance and wear and tear clause, and better identification and handling of vulnerable customers.  

“We look forward to continuing to collaborate with the government, opposition and other stakeholders on the report’s recommendations,” CEO Andrew Hall said. “Getting the balance right between good customer outcomes without putting further pressure on premiums will be key to successful implementation.”

Consumer groups and counsellors have called for the industry to accept the proposals and to respond immediately. 

“Floods and the threat of climate disaster are sadly the ‘new normal’ and the changes are absolutely vital to ensure people and society can recover and move on from such events,” Consumer Action Law Centre managing lawyer Philippa Heir said. “People pay for insurance to protect their homes and safeguard their future. We need these changes to ensure people really get what they pay for.” 

The Association of Insurance Building and Engineering Consultants has noted recommendations on expert reporting services and scopes of work, and says it welcomes engagement with ICA, regulators, the Australian Financial Complaints Authority and Engineers Australia. 

The Australian and New Zealand Institute of Insurance and Finance will host a webinar on Thursday where Dr Mulino will speak on the findings. 

“ANZIIF recognises the importance of the flood inquiry report in ensuring good customer outcomes,” CEO Katrina Shanks said. “We are committed to supporting the industry through quality education and professional development which continually strengthens the insurance sector.”  

The inquiry conducted 23 public hearings between January and July and visited flood-affected areas from Queensland to Tasmania. It received 108 submissions and 60 supplementary submissions, and more than 650 people provided feedback through an online survey. 

Coalition members released additional comments with the final report and independent member Andrew Gee, whose electorate includes Eugowra in NSW, made a further 38 recommendations. 

Mr Gee rejected industry “excuses” such as unprecedented flooding, poor planning decisions “since the time of Governor Macquarie and European settlement”, covid, labour shortages and the Ukraine war. “While not every insurance company did the wrong thing, the hell that a number of these large insurers have put policyholders though should not be sugar-coated,” he said.  

See Analysis. 

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