Delays and confusion about policy wordings are recurring themes in two WA submissions to the House of Representatives inquiry into the operation of the insurance industry during disasters.

The submission of the state’s Department of the Premier and Cabinet highlights four key themes:

• Individuals, particularly indigenous people, have a poor understanding of insurance and were underinsured in recent disasters;
• Confusion over definitions of water inundation was common;
• Households and organisations are ineligible to obtain some types of cover due to their location. Last year’s Carnarvon floods caused crop losses of around $9 million, but horticulturalists would probably not have been eligible for insurance;
• There was a lack of insurance for community assets and infrastructure.

The department says consumers generally do not understand lengthy product disclosure statements and are confused by flood definitions. Nor are many aware of being underinsured.

The City of Armadale’s submission says residents affected by February’s bushfires reported delays in assessments and updates, with some waiting up to six months for a decision from their insurer.

“Indecision and lack of progress by some insurers has had significant emotional and psychological effects on some residents,” it said.

Some 65 homes were destroyed in the Roleystone/Kelmscott bushfires on February 6.

The city council says people were confused about their policies and unsure of their cover, “leaving them with a feeling they were not in a position to argue their entitlements”.

Consumers who were underinsured said they had renewed without verifying or reviewing their coverage.

“Some had been with the same insurance company for a substantial number of years and just assumed they were adequately covered.”

The city arranged for an Insurance Council of Australia representative to meet residents. It says that although good advice was provided, “the feedback that we have is that there was very little or no follow-up on the concerns raised”.

“The general consensus of the residents was that it had not been of any value to them [and was] a complete waste of time.”

The submission says residents did report positive experiences with insurers, particularly SGIO and RAC-WA.