Delays in settling insurance flood claims mean that costs are transferred from insurers to the public sector, according to a submission to the House of Representatives inquiry into the industry’s response to disasters.

The Central Goldfields Shire Council, covering an area of central Victoria that was flood-affected over summer, says residents found it hard to get accurate or useful information about making a claim and most were not aware of their level of cover.

“Much has been made of the high completion rate of initial claims by insurers,” the council’s submission says. “However, this has not necessarily translated to work on damaged properties or a satisfactory resolution of people’s disputes in a timely manner.”

It says the delay has greatly increased demand on housing and support services.

“In effect what has happened is a cost shift from the private sector to the governmental sector. A better model would be for those insured to first receive support from their insurance company and then have government support those who do not have coverage.”

The council says some third parties caused confusion, particularly when hydrologists’ opinions differed.

Several organisations sent the committee the submissions they had made to the Natural Disaster Insurance Review, including Brisbane City Council, the Queensland Government, the Institute of Actuaries and Strata Community Australia.

The submission from the Australian Securities and Investments Commission (ASIC) says it has received relatively few complaints about flood insurance from the Queensland floods, although this may be because claims are still being processed or complaints have gone to internal dispute resolution or the Financial Ombudsman Service (FOS).

The Insurance Council of Australia (ICA) submission says the industry performed extremely well in the face of huge and unprecedented demand.

At June 24, the industry had received 180,410 claims with an insurable cost of $4.149 billion from five events: Queensland and Victorian flooding, Cyclone Yasi, severe storms in Victoria and Perth bushfires.

The industry sent representatives to more than 50 events such as community meetings, and ICA established a taskforce of insurers in disaster areas to address issues that might impede service delivery.

The ICA submission says flood claims take longer to process because access to properties is often disrupted or hazardous, damage is hidden and in the case of Cyclone Yasi, engineering reports may be required.

It notes the February Christchurch earthquake needed resources at the same time, with Australian-based insurers underwriting 75% of the damage there.

ICA says that dispute resolution is under way, and FOS estimates it will receive 700 cases from the Queensland events, or 0.56% of all claims lodged.

A submission from the National Pro Bono Resource Centre, a non-profit legal organisation, says the insurance industry and legal profession should consult each other as part of their emergency preparedness and disaster planning, particularly to provide community legal education to increase public awareness of insurance matters as legal issues.

It says effective provision of legal information and advice following a disaster would improve access to external dispute resolution, and the legal community needs adequate resources to provide a co-ordinated response that supports people with insurance matters.

It says requests for legal assistance about insurance peaks three to six months after a disaster.