Insurers warned, but nation must mitigate for disasters
Tess Ikonomou |
Insurers have been warned by Australia’s financial watchdog that penalties will be considered for companies that do the wrong thing, but the nation must also take notice of mitigation efforts.
A parliamentary inquiry has been told of hostile and under-handed behaviour by insurance companies, as it investigates how the industry responded to flood claims made in 2022 across Victoria, Queensland and NSW.
Alan Kirkland, commissioner at the Australian Securities and Investments Commission, told the Friday hearing, the watchdog expected a “significantly better” response to this year’s natural disasters on the nation’s east coast.
“We’ll be monitoring the industry’s response through our regular contact with consumer organisations assisting people with claims, the reports we received directly from the public, and the issues reported to us by the Australian Financial Complaints Authority,” he said.
“If we see serious failures by insurers to comply with their legislative requirements, we will consider enforcement action.”
Mr Kirkland described the industry’s response to the 2022 floods and storms as “disappointing”.
He pointed to the evidence provided to the committee, which was told of “vindictive” behaviours including threats made towards vulnerable people and delays in clearing out waterlogged homes.
“We will only see improvements to the problems … through a coordinated effort by government regulators, consumer groups, and in particular the insurance industry,” the commissioner said.
“In a context where many people are struggling and facing difficulty affording insurance it is particularly important that insurers live up to the promises they make about pricing and discounts.”
Mr Kirkland said a report published by the watchdog in June last year, revealed “systemic failures” by a number of insurers to live up to the pricing promises they had made to their customers.
The Australian Prudential Regulation Authority executive board member Suzanne Smith said the ongoing severity and frequency of disasters, including their costs to communities, meant people had to take notice of mitigation efforts.
Asked about a public ranking system of insurance companies to encourage performance, Ms Smith said in response “transparency is good”.
She said insurance companies had paid almost $40 billion in claims to their policyholders in the last financial year, and $9 billion to households.AAP