Insurance companies need to work fast to ensure claims from the weekend’s storms are paid promptly, says shadow minister for the Illawarra Ryan Park.
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Mr Park wrote a letter to the Insurance Council of Australia, calling for the claiming process to be “as smooth and hassle-free as possible”.
The letter was driven by what happened to homeowners in the Illawarra during the 1998 storms.
The city got 314mm of rain in less than 24 hours but most insurance companies decided not to pay claims, saying the damage was as a result of floodwaters rather than the storm.
After a strong community campaign, many insurance companies reversed their decision and began paying out claims.
Some, including QBE, stood firm and did not pay out. More than a decade after the floods, some residents claim the company still had not paid out on their claims.
It was a time that left a lingering resentment to insurance companies in the region.
“Residents of this region still remember the struggles faced after the 1998 storms which left homes flooded and unliveable,” Mr Park wrote in his letter.
“Delays in getting insurance paid left them in financial hardship.”
Mr Park said there had been no reports yet of customers having difficulties but he was putting the companies on notice.
“Insurance companies are very good at collecting money and I am making it clear to all of them that customers now have every right to expect claims to be processes in a timely and efficient manner,” Mr Park said.
Insurance Council of Australia’s acting CEO Karl Sullivan said the severe storms that hit the east coast have been declared an “insurance catastrophe”.
Mr Sullivan said the declaration enabled insurers to fully harness the industry’s disaster response resources.
“The ICA and its members are liaising with state governments, agencies and the emergency services in response to the damage caused by these storms,” Mr Sullivan said.
As part of the declaration the council has established a taskforce and preparing staff to work directly with affected policyholders.
“So far most claims concern typical storm damage, such as roof and gutter damage, and damage due to fallen trees,” Mr Sullivan said.
Insurance claims from storms hit $38 million
Insurance companies have received more than $38 million in initial claims over damage caused by the wild weather that buffeted much of the east coast, declaring it a "catastrophe" event.
So far, customers in NSW and Queensland have made 11,150 insurance claims over damage caused by the heavy rainfall, storms and flooding, the Insurance Council of Australia (ICA) said on Monday.
The industry-wide cost of these claims was $38 million, though insurers said it was too early to say what the full cost of the extreme weather would be, as more claims would be made in the coming days.
The declaration of a "catastrophe event" means the insurance industry will arrange a taskforce to focus specifically on damage from the wild weather, diverting resources towards most-affected areas.
"So far most claims concern typical storm damage, such as roof and gutter damage, and damage due to fallen trees. There are also reports of cars being flooded in some locations," ICA acting chief executive Karl Sullivan said.
"The ICA expects the number of claims will keep rising over coming days as evacuated residents return to their homes to assess the damage."
The east coast low pressure system that pummeled Sydney over the weekend has caused damage to property across the city, with waterfront land washed away in beachside properties in several suburbs.
A spokeswoman for IAG, which sells insurance under brands including NRMA and CGU, said on Monday there had been 2000 claims so far, and most of these related to home insurance.
Suncorp, which owns the AAMI, GIO and APIA brands, said it was too early to provide claim numbers, and advised affected customers to contact their insurance company.
"Affected customers should contact us as soon as they possible, even if they don't have access to their properties," a Suncorp spokeswoman said.
"We also urge people to listen to local authorities in terms of whether areas are deemed safe, and beware of any fallen power lines, asbestos, broken glass and mould."
The damage to beachside properties in Sydney comes after a report by the Climate Institute this month highlighted the potential risks to parts of the financial system from mortgages over homes that may be under threat from risks such as rising sea levels.
It was estimated in 2009 that $74 billion worth of Australian houses may be at risk from natural hazards, but the report said the current figure is "almost certainly" greater than this.
Shares in the country's two biggest general insurers, Suncorp and IAG, had fallen 1.9 per cent and 2.4 per cent, respectively, shortly before the market closed.
However, Bell Potter analyst TS Lim said the impact of the storms on insurance profits would be limited, because most of the claims were probably from water damage, which tends to be less costly to repair than damage from hail storms.
The NSW State Emergency Service on Monday said it had received more than 9250 jobs during the recent very heavy rainfall across the state, and more than 280 flood rescues.
Clancy Yeates, smh.com.au