Assistant Treasurer Bill Shorten has hit out at the “unacceptably and substantially higher” rate of insurance disputes for claims over the Queensland floods when compared to other natural disasters.

He says that with more than 99% of claims having now received a response from insurers, the refusal rate stands at around 15%. “At this stage the rate of disputes for flood claims is unacceptably and substantially higher than for other natural disasters such as bushfires, cyclones and hailstorms.”

Insurance Council of Australia (ICA) GM Risk and Disaster Planning Karl Sullivan says the rates of refusal and dispute are typically higher in those disasters where cover is limited and there are policy exclusions, such as is the case with flood.

He says around 1.2% of Queensland flood claims have been referred to the Financial Ombudsman Service, compared to an average of around 0.5% of all claims over the past year.

“In context, the rate of disputes is actually relatively low,” Mr Sullivan told insuranceNEWS.com.au. Had the Queensland floods occurred in 2006 the rate of denial would have been 97%, as flood cover was rarely offered before then.

“That’s an enormous leap forward for the insurance industry.”

Mr Sullivan also says only 8% of flood claims Queensland-wide have been refused, with the 15% refusal rate confined to the Brisbane local government area.

He says the rate of refusal is higher in Brisbane because city residents typically have a higher expectation that appropriate flood mitigation mechanisms are in place, and they therefore buy less flood cover. “Country policyholders have a greater experience of flood,” he adds.