Insurance industry submissions to the parliamentary inquiry into the insurance industry’s response to natural disasters have rejected the concept of legislated timeframes for handling disaster claims.

Some submissions call for a time limit for insurers to process claims, but Suncorp says black letter law timeframes would be problematic when insurers get high volumes of claims in a short period.

IAG says that in some cases insurers cannot get into affected areas. If timeframes were legislated, insurers would have to make an initial determination more quickly and customers would suffer.

“While customers would prefer timelines to be as short as possible, in reality the resulting impact on claims determinations would not be welcome by customers, and CGU believes the thoroughness of the assessment process is the most important factor to consider.”

The National Insurance Brokers Association (NIBA) says the time taken to process disaster claims has generally been reasonable given the circumstances.

The Financial Ombudsman Service (FOS) says that in February five insurers notified it that they could not comply with all the timeframes in the General Insurance Code of Practice due to the volume and complexity of work. It says there was no significant breach of the code.

FOS dealt with five insurers that failed to notify consumers of the six-month “cooling-off” period, or right to a review, relating to catastrophe claims. About 3500 policyholders were affected.

The House of Representatives Social Policy and Legal Affairs Committee is inquiring into the role of third parties in disasters. Some submissions say third parties have complicated and delayed claims, but RACQ Insurance says external experts are an essential part of the process.

It says the complexity of the Queensland events meant legal advice was needed and hydrologists had to investigate the cause of inundation.

Submissions also contained complaints that people whose claims were rejected on the basis of hydrologists’ reports could not get the reports, but RACQ says the hydrologists’ opinions were obtained by its legal team to enable it to provide advice on whether claims were covered so were subject to legal professional privilege and privacy laws. 

However, it says following discussions with FOS and community legal centres, it has decided to release regional hydrology reports to FOS and to customers or their legal representatives.

NIBA says its members have raised concerns about the availability of independent experts to challenge the views of an insurer’s hydrologist.

They have also reported that clients have hired lawyers who have not told them of the free service provided by FOS, and NIBA says this should be investigated. 

A submission from consumer groups including Choice says the insurance industry should be required to fund a panel of expert independent hydrologists administered by FOS that can give consumers free advice in disputes over flood insurance.

The Choice submission also recommends that a specialist insurance legal service be funded in each state and territory to help consumers with insurance disputes.

Legal Aid Queensland says differing wording in insurance policies makes it hard for consumers to compare them and this is compounded by policies being sold over the phone.

The agency gives examples of consumers saying their insurer misrepresented its flood coverage, and it is acting in more than 470 challenges to insurance decisions.

Both Legal Aid Queensland and the Australian Communications Consumer Action Network note it is expensive for people to call insurers’ 1300,1800 or 13 numbers from their mobile phones when their landline may have been damaged in a disaster.