Common complaints to the Financial Ombudsman Service (FOS) over flood insurance claims concern whether consumers have been clearly informed of their coverage, policy exclusions and definitions and hydrology reports.

FOS has devoted its November circular to flood issues and summarises some recent determinations by its panel.

Many of these have gone against insurers who could not show that consumers had received documents or been informed about limitations on cover.

FOS Manager of Dispute Resolution Graham Warner told insuranceNEWS.com.au that disputes often could have been avoided with effective communication, both in the sales and claims processes.

He says underlying the complaints is the number of events, with the February 22 Christchurch earthquake, Brisbane floods and Cyclone Yasi occurring within a few weeks of each other and stretching the industry’s ability to respond.

FOS has received about 1000 flood-related complaints, of which 500 are still awaiting determination.

The service says it looks closely at the process at the policy inception stage and notes that call recording can be “a most useful tool”.

In some determinations, consumers say they have been misled by the sales consultant into believing their policy would cover flood. In other cases insurers could not prove that an intermediary clearly informed their clients about the coverage.

FOS says that although a product disclosure statement will usually satisfy the requirement to clearly inform, this is not always the case. In one determination, an insurer did not clearly inform the insured about limitations to cover and had to pay the claim in full.

FOS also found discrepancies between hydrologists’ reports and those by others, such as loss adjusters.

The FOS panel found one insurer liable for a claim where a consumer provided diagrams, rainfall data and a flood management group report while the insurer relied on an area hydrology report and failed to send an assessor to the property or address the insured’s information. The panel said the insurer had not established on the balance of probabilities that the loss was caused by an excluded event in the policy.

In another case where the insurer provided site-specific hydrology and an assessor’s report, the panel was satisfied that the evidence established the exclusion for flood applied.