Thousands of Australians have been impacted by recent natural disasters. Whilst fighting to rebuild their lives, those severely affected are further impacted by insurance disputes delaying disaster-focused insurance payouts, which has caused complaints towards the insurance industry to surge.
Background – insurance disputes
With the aftermath of widespread flooding throughout Australia’s east, flood and other disaster-related insurance claims are at an all-time high.
In May 2022, the Insurance Council of Australia found that storm and flood victims across South-East Queensland and coastal New South Wales made 197,000 insurance claims collectively, with an estimated cost to insurers of $3.35 billion.
The fallout from NSW’s recent July floods has led to an additional 8,000 insurance claims costing an estimated $97.9 million, adding to an already overflowing list of claims.
The significant increase in flood-related claims has caused a flow-on effect slowing down the claims process for claimants across the industry. Claims for these disaster-related events aren’t limited to home and contents. It also extends to cars, life insurance, income protection, and business interruption, to name a few. These require time-consuming insurance adjuster call-outs, trade reviews and overall damages assessments to be carried out before the claim resolves and is paid to the consumer.
These delays are naturally causing consumers to be frustrated about the delays impacting their everyday lives. As a result, these frustrations turn to internal and external regulatory complaints against the claims handlers and the insurers.
Increase in insurance disputes and complaints
The Australian Financial Complaints Authority (AFCA) is the external complaints organisation for consumers, which has replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. It has the authority to resolve complaints for all major financial institutions and insurers holding financial services licenses. The recent natural disasters have seen a 3% increase in complaints to 72,358 in the last financial year.
Although the recent natural disasters explained the rise in complaints, the number of disputes escalated to AFCA is concerning. AFCA is now experiencing delays in helping complainants across all industries. With staffing shortages at an all-time high, it is reported that the failure to communicate and appropriately inform claimants on the progress of their claims causes them to escalate their frustrations to the regulatory authority.
Claimants are often ill-prepared or misinformed about the process behind the assessment and ultimate resolution of an insurance claim. While the volume of complaints can’t be avoided, mitigating the risk of causing a delay and assisting the insurer to best assess damages in your favour only benefits a complainant. Understanding the claim’s process and your rights when making an insurance claim is essential to obtaining the best outcome.
What you need to know
Many insurance policies provide coverage for damage to property caused by floodwater. If flood cover is part of your insurance policy, your claim should be successful. However, sometimes, it can come down to a single word in your policy or the information you provided after an incident or accident that the insurer uses to deny what seems like a valid claim.
If your claim is rejected, it is essential to seek independent legal advice from an experienced insurance dispute lawyer. A lawyer can review your policy and what has taken place and help you understand your rights to access your full entitlements.
Steps to making a claim:
1. Take emergency documents
Ensure that your insurance documents, either a hard or electronic copy, are in one place. It will simplify referring to those documents or provide them to your insurer.
2. Check your policy cover
Review your product disclosure statement (PDS) to determine whether your insurance policy covers you for the damage you are claiming. Remember that insurance policies may have a waiting period of up to 48-72 hours after taking out a policy for you to make a claim.
3. Photograph all damage
To make a successful claim, you must provide evidence. You should photograph and record all damages to your belongings and property, but only when it is safe. Keep any receipts you can use to reflect the value of your items.
4. Reach out to your insurer
Once you are safe, dry and in a secured place, contact your insurer.
There are various ways to contact the insurer, such as by email, phone or online. We recommend that you record all communications with your insurer. Do not distress if you do not have your insurance documents with you. The insurer can most often identify your policy by name and address.
5. What if I don’t have cover?
Without flood cover, you may need to refer to your PDS (product disclosure statement) to see whether you are covered from storm or rainwater damage. Note that you may need to prove where the water came from and how it reached your property.
6. Get legal advice
Having the guidance of a lawyer experienced in this can speed up the negotiation process with insurers and help ensure you receive everything to which you are rightfully entitled.
Vogue Advisory Group – helping ensure your policy is right for you to prevent disputes arising
We want to help you prevent a dispute. If you need advice on your insurance policy, contact our team at the earliest opportunity, and we can assist.